The town was founded in 1885 as a railroad stop on the Northern Pacific Railroad as Simcoe, Washington. The Dawes Severalty Act of 1887 made it legal for the Yakama Indian Nation to sell their lands and began to draw settlers into the area. In the early 1900s, McCredy and George Rankin established the Wapato Development Company and laid out the town site. In response to persistent confusion with nearby Fort Simcoe, the town changed its name to Wapato in 1903. The 1906 Jones Act further encouraged Anglos to purchase land from the Yakamas. Wapato was officially incorporated on September 16, 1908, with a population of around 300 people. Through the 1970s and into 1990, Wapato produced some of the largest volume potato and apple crops, as tonnage per acre.
Today, Wapato boasts one of the most Hispanic populations in Washington State (76% in the 2000 census)