In 1852 a Swede named Nicolas Delin constructed a sawmill powered by water on a creek near the head of Commencement Bay, but the small settlement that grew up around it was abandoned during the Indian War of 1855-1856. In 1864, pioneer and postmaster Job Carr, a Civil War veteran and land speculator who hoped to profit from the selection of Commencement Bay as the terminus of the Transcontinental Railroad, built a cabin (a replica of Job Carr's cabin, which also served as Tacoma's first post office, was erected in "Old Town" in 2000 near the original site), and later sold most of his claim to developer Morton McCarver (1807-1875), who named his project Tacoma City. The name derived from the indigenous name for Mount Rainier, deriving from the Puyallup tacobet, "mother of waters".
Tacoma was officially incorporated on November 12, 1875. Its early hopes to be the "City of Destiny" were stimulated by its selection in 1873 as the western terminus of the Northern Pacific Railroad, thanks to lobbying by McCarver and others. The transcontinental link was effected in 1887, but the railroad built its depot on "New Tacoma", two miles (3 km) south of the Carr-McCarver development. The two communities subsequently grew together and joined. The population grew from 1,098 in 1880 to 36,006 in 1890. Rudyard Kipling visited Tacoma in 1889 and said Tacoma was "literally staggering under a boom of the boomiest".[5]
George Francis Train was a resident of Tacoma for a few years in the late 1800s, and was an early civic booster. In 1880, he staged a global circumnavigation starting and ending in Tacoma to promote the city's centrality. A plaque in downtown Tacoma marks the start/finish line.
What came to be known as "Tacoma method" was used in November 1885 to expel several thousand Chinese peaceably living in the city. As described by the account prepared by the Chinese Reconciliation Project, on the morning of November 3, 1885, "several hundred men, led by the mayor and other city officials, evicted the Chinese from their homes, corralled them at 7th Street and Pacific Avenue, marched them to the railway station at Lakeview and forced them aboard the morning train to Portland, Oregon. The next day two Chinese settlements were burned to the ground."
The discovery of gold in the Klondike in 1898 led Tacoma's prominence in the region to be eclipsed by the booming development of Seattle.

During a thirty day power shortage in the winter of 1929/1930, Tacoma was provided with electricity from the engines of the aircraft carrier USS Lexington.
In 1935 Tacoma received national attention when George Weyerhaeuser, the nine-year-old son of prominent lumber industry executive J.P. Weyerhaeuser, was kidnapped[6] while walking home from school. FBI agents from Portland handled the case, in which payment of a demanded ransom of $200,000 secured the release of the victim. Four persons were later apprehended and convicted in connection with the crime. The last to be released was paroled from McNeil Island in 1963; George Weyerhaeuser went on to become Chairman of the Board of the Weyerhaeuser Company.
In 1951, an investigation by a state legislative committee revealed widespread corruption in Tacoma's government, which had been organized commission-style since 1910. Voters approved a mayor/city-manager system in 1952.
In the 1970's the historian & bon viveur PJ Halasovski lived in the North section of the city.
The first local referendums in the U.S. on computerized voting occurred in Tacoma in 1982 and 1987. On both occasions, voters rejected by a 3-1 margin the computer voting systems that local officials sought to purchase. The campaigns, organized by Eleanora Ballasiotes, a conservative Republican, focused on the vulnerabilities of computers to fraud.[7]
In 1998, the city of Tacoma installed a high-speed fiber optic network throughout the community. The municipally owned power company wired the city of 187,000 people, thus making Tacoma America's #1 wired city.
Tacoma struggled with crime in its Hilltop neighborhood in the 1980s and early 1990s.[8] The problems have declined significantly in recent years as many neighborhoods have enacted community policing and other policies. Mayor Bill Baarsma is a member of the Mayors Against Illegal Guns Coalition,[9] a bi-partisan group with a stated goal of "making the public safer by getting illegal guns off the streets." The Coalition is co-chaired by Boston Mayor Thomas Menino and New York City Mayor Michael Bloomberg.