It was part of the Waldo Patent purchased about 1720 by General Samuel Waldo of Boston. First called Broad Bay, the village was settled between 1733-1740, but thereupon suffered a devastating attack by Indians allied with New France during King George's War. Houses were burned and inhabitants killed or carried away as captives. Survivors fled to the nearby settlements of St. George or Pemaquid. But peace returned with the 1748 Treaty of Aix-la-Chapelle. In 1752-1753, Samuel Waldo, son of the general, visited Germany and recruited about 1,500 immigrants, most from the Rhineland. Many settled on the western side of Broad Bay, although in 1763-1764 the land was claimed under the Pemaquid Patent. About 300 residents moved to the Moravian settlements in North Carolina, but the remainder bought their properties. On June 29, 1773, the township was incorporated as Waldoborough, named for the original proprietor.
Waldoboro became county seat of Lincoln County in 1786, but the designation would shift to Wiscasset in 1880. Farms produced hay and potatoes. The Knox and Lincoln Railroad arrived and spurred the town's development. Industries would include an iron foundry, an oakum mill, a carding and cloth-dressing mill, a grain mill, sawmills and planing mills, furniture and molding mills, a door, sash and blind factory, and a carriage factory. There were also marble and granite yards and a pottery. But ship building was the principal business, with 8 large vessels built in 1880. Waldoboro was the launching port for the Governor Ames in 1888, the first five masted schooner. A port of entry, the town features an 1857 custom house designed by Ammi B. Young.
As of the census of 2000, there were 4,916 people, 1,983 households, and 1,348 families residing in the town. The population density was 69.1 people per square mile (26.7/km²). There were 2,360 housing units at an average density of 33.1/sq mi (12.8/km²). The racial makeup of the town was 98.62% White, 0.22% Black or African American, 0.14% Native American, 0.43% Asian, 0.08% Pacific Islander, 0.04% from other races, and 0.47% from two or more races. Hispanic or Latino of any race were 0.26% of the population.
There were 1,983 households out of which 31.2% had children under the age of 18 living with them, 54.5% were married couples living together, 9.6% had a female householder with no husband present, and 32.0% were non-families. 25.7% of all households were made up of individuals and 11.4% had someone living alone who was 65 years of age or older. The average household size was 2.45 and the average family size was 2.91.
In the town the population was spread out with 25.3% under the age of 18, 6.6% from 18 to 24, 26.7% from 25 to 44, 25.0% from 45 to 64, and 16.4% who were 65 years of age or older. The median age was 40 years. For every 100 females there were 96.1 males. For every 100 females age 18 and over, there were 90.9 males.
The median income for a household in the town was $34,830, and the median income for a family was $41,042. Males had a median income of $30,788 versus $22,462 for females. The per capita income for the town was $17,117. About 9.7% of families and 12.9% of the population were below the poverty line, including 13.6% of those under age 18 and 12.6% of those age 65 or over.