The city of Warsaw began in 1814, when young Major Zachary Taylor founded Fort Johnson on the eastern bank of the Mississippi River across from the mouth of the Des Moines River. Fort Johnson was occupied only for a few weeks before it was burned. In 1815 another military camp, Fort Edwards, was built nearby at a different location. Warsaw became an important fur trading post and one of the earliest American settlements in northern Illinois.
During the 1840s, Warsaw was a center of opposition to Mormon settlement in Nauvoo and other areas in Hancock County during the conflict sometimes known as the "Mormon Illinois War". The local newspaper at the time, the Warsaw Signal edited by Thomas C. Sharp, was a vocal opponent of Mormon settlement and practices in western Illinois. The Mormons, led by Willard Richards, attempted to establish a settlement at a site just south of Warsaw during this period, but abandoned these plans due to local opposition and other problems.
The city is notable for its well-preserved downtown with a number of remaining historic businesses. Founded by German immigrants, the Warsaw Brewery opened in 1861 and operated for more than 100 years, ending production in 1971. The facility was renovated and reopened in 2006 as a bar and restaurant.