First named Okkaddo when it was set off in 1840, this county was renamed Otsego in 1843 after a New York county and lake of that name. It is said to mean "clear water." Settlement did not begin until the late 1860's when lumbering was started.

Otsego Lake, the first village, was founded in 1872 and became county seat in 1875 when the county was organized. Settled in the year 1874 by the Jackson, Lansing & Saginaw Railroad, the new community was named for Augustine Smith Gaylord, an attorney for the railroad and named county seat in 1877. Farming and the tourist industry are now the chief businesses.