In 1804, Colonel Robert Patterson purchased uninhabited land along the Miami River south of the city of Dayton. Patterson built a homestead along Brown Street in Dayton, and his farm, mill and out buildings occupied Northern Oakwood near Rubicon Road and along Schantz Avenue.

In 1822, there were 10 taxpayers owning land in present day Oakwood. Settler William Kramer owned 60 acres on which he cultivated orchards and vineyards. He also grew expansive flower gardens for visitors to stroll and enjoy. His original property today straddles Kettering and Oakwood and contains the Dayton Country Club.

Large farms appeared on the east side of present-day Oakwood. The terrain was rocky, but relatively flat. The west side of Oakwood was unsuitable for farming, so land owners opened stone and gravel quarries. The Long-Romspert family owned a quarry behind their home (the present-day historical society). The quarry ran the length of what is today Coolidge Drive.

In 1872, Haas, Mitchell, Dixon and Harman established the settlement of Oakwood, platting lots for 94 homes. Only a small number of homes were constructed at that time and development was abandoned shortly thereafter.

In the 1880s, families began to build summer and a few permanent homes on Oakwood Ave. Others built estates further out of Dayton in present-day Oakwood that were used for raising horses or to provide privacy for large wealthy families. John H. Patterson established his estate overlooking

Dayton and his company (National Cash Register) on the site of the present-day Lutheran Church of Our Savior at Thruston Blvd and Woods Rd. Patterson was largely influential in the physical and governmental development of Oakwood. Patterson created Hills and Dales Park which had an entrance off Far Hills at Peach Orchard Rd. Patterson established Sugar Camp, a NCR training camp along today's West Schantz Ave, where classes started in 1893. He subsidized and published the first Oakwood newspaper, "The Oakwood Village Record," which ran monthly. He donated the land and partial funds for the East Oakwood Club building, today's Oakwood Community Center.

As the turn of the 20th Century approached, original owners of lots began to sell holdings, which were platted into lots for home building. Generally, this began at the north end of Oakwood, north of Five Points (Far Hills, Oakwood and Thruston). The Oakwood Street Railway, which had been started as a horsecar line in 1871 running on Brown St from Downtown Dayton to Oakwood and Park (and at some point was abandoned from Oakwood and Park to Brown and Stewart) was electrified in 1895 as far as Five Points. This began to encourage growth in the north end of Oakwood, allowing people to live outside the city of Dayton, but still be able to travel downtown for employment, shopping, and entertainment.

Oakwood incorporated as a village in 1908 with 67 homes. In 1912, Orville Wright and his sister, Katherine, and father, Bishop Milton Wright, moved to a new home at the corner of Harman and Park Avenues. Known as Hawthorn Hill, the home was an a NCR guesthouse for many decades, was donated back to the Wright family for the preservation of the Wright Brothers legacy, and is today part of Dayton History.

Oakwood had begun to grow when the 1913 Dayton Flood destroyed much of the low lying parts of Dayton. Demand for homes out of potential flood areas helped to spur further growth in Oakwood, as home developers tout the height of Oakwood above Third and Main in their advertisements. An inhibitor to growth southward was the poor condition of Far Hills Ave/Lebanon Pike, and the associated difficulties with getting horses up and down the hill. The Oakwood Street Railway extended from Five Points to Aberdeen in 1916, and to Hadley in 1918, and the availability of transportation to Downtown Dayton began to encourage homeowners to buy lots and build homes on "the top of the hill."

Oakwood's population boomed during the 1920s and 1930s. Automobiles were becoming more popular, available, and affordable. Home developers had access to cheaper materials and could construct quality modern homes at a faster and less expensive rate. Many of the 3000+ homes in Oakwood today were built in this time period. By 1931, the Village of Oakwood became the City of Oakwood. In 1924, the city instituted a full time Public Safety Department, which combined police and fire operations under one command, with officers (originally called "wardens") performing both roles. Highly innovative back then, now in the 21st Century it has become more popular.

Oakwood saw very little growth during the depression and lead up to World War II. Residents converted their homes into room rentals, restaurants, and grocery stores to sustain their families through the hardest years. Large estate homes became convents and guesthouses for the brothers working at the University of Dayton. Some residents lost their homes to bank foreclosures.

World War II created a manufacturing and engineering boom in Dayton and at Wright-Patterson Air Force Base. The increase in jobs and wages spurred new homes and growth in Oakwood. During the war, WAVES slept at the Sugar Camp training facility and worked at NCR on the ENIGMA code breaking project. The need for classified work to develop triggers for atomic weapons prompted the War Department to take over the Runnymede Playhouse at West Dixon and Runnymede in 1942. Following the war, this facility was removed, along with seven feet of the soil on which it was built.

Between 1912 and 1954, Oakwood's footprint grew by annexing adjacent lands. By the end of the 1950s, the cities of Kettering and Dayton surrounded Oakwood, and the borders of what is today the City of Oakwood (except for several properties traded between Oakwood and Kettering in the 1970s) were finally defined. Larger estates and lots continued to be subdivided and platted for new home construction. This is seen in the Schantz Historical District where homes from the 1910s and 1960s sit next to one other.