The town of Montevarchi sprang up around 1100. It took its name from a castle which dates back to the early 900s. At first the castle belonged to the Marquess Bourbon Del Monte di Santa Maria, then to the Count Guidi family. In 1273 ownership passed to the Signoria of Florence. One of the town's first "podestа" (mayor) was Brunetto Latini.

During the rule of the Medici, the town expanded considerably due to its flourishing agricultural trade and its wool and silk industries, controlled by the Wool maker’s Guild. Montevarchi remained under Florentine control until the end of the first half of the 18th century; then the town became part of the territory of Arezzo.

After the unification of Italy, it became an important centre for manufacture of felt hats and, during the post World War II period, of shoes, hats, ladies' and children's wear. Today it is still a clothes production hub, while also important in the production of electricity (one hydroelectric and one thermoelectric plant).