Greytown was first settled on 27 March 1854 under the Small Farms Association Settlement Scheme and was named after Governor Sir George Grey, who arranged for the land to be bought from local Māori. It became a Borough in 1878 and a ward of the South Wairarapa District Council in 1989.
The first Arbor Day celebration in New Zealand was held in Greytown on 3 July 1890. Greytown Beautification Society has done a lot to keep the spirit alive for many years, especially Stella Bull and the park bench in the park dedicated to her, which states, “Only God can make a Tree”. Today the town has many beautiful trees and a register is kept to help protect them.
In the 1870s, when the Public Works Department announced plans that the Wairarapa Line railway between Featherston and Masterton was not going to pass through Greytown, local protests were successful in attaining approval for a branch line to the town. It ran to Greytown Railway Station from a junction with the Wairarapa Line in Woodside and opened on 14 May 1880.
For a few months, it acted as the terminus of the Wairarapa Line itself before the extension to Masterton opened, but once it was relegated to branch line status, it was one of the quietest railway lines in the country. It was closed on 24 December 1953, and at the time of closure, its revenues were only a tenth of its operating costs. Greytown travellers are now serviced by Woodside Railway Station on the Wairarapa Line.