The town is part of the land grant made to von Steuben after the American Revolution. He maintained his summer residence in a log cabin in the town. His remains are buried in a state historic site east of Steuben village.
Steuben was formed from part of the Town of Whitestown in 1792. In 1796, part of Steuben was used to form the newer Town of Floyd and Town of Rome. Steuben was reduced again in 1797 to form the Town of Western.
The population of Steuben in 1920 was 786.