Established by an act of the New York State Legislature on June 7, 1895, the Town of Colonie received its name from the Dutch "Colonye," meaning "the settlement outside the city." It was created from the Town of Watervliet when farmers living in the rural part of the Town of Watervliet were dissatisfied with being governed by the Village of West Troy. The New York State Legislature, after listening to their concerns, allowed the rural portion of the Town to secede. Subsequently, most of the former Township of Watervliet, except for the City of Watervliet, became the Town of Colonie.

Since its inception, the Town has steadily grown to become the largest and most populous suburb in Albany County with 57.2 square miles and nearly 80,000 residents.The newly renovated and expanded Albany International Airport is located within the borders of the Town, and the Amtrak Railway is a short drive away. Colonie is bounded on the north by the Mohawk River and on the East by the navigable Hudson River.The Town of Colonie, a Town of the first class (in New York, towns are either first or second class depending upon their size), is one of 932 towns in the State of New York. It ranks 16th in population, and is the largest of the 10 towns in Albany County.

Colonie is located in the 21st Congressional District, the 107th Assembly District and the 42nd Senatorial District.