Dayton was founded by a small group of settlers on April 1, 1796, seven years before the admission of Ohio to the Union in 1803. The town was incorporated in 1805 and named after Jonathan Dayton, a captain in the American Revolutionary War and signer of the U.S. Constitution.

The nickname of the city is the Gem City. No one appears to be sure of the reason for the name: either a famous racehorse named Gem hailed from Dayton, or the city was as pretty as a gem. The most likely story is that the nickname was spawned from an 1840s article in a Cincinnati newspaper, which said, "In a small bend of the Great Miami River, with canals on the east and south, it can be fairly said, without infringing on the rights of others, that Dayton is the gem of all our interior towns.

Due to it being the hometown of the Wright Brothers, and the fact that they assembled their planes there, Dayton is also known as the Birthplace of Aviation.