The hamlet was located around what is now the intersection of Dundas Street and Bronte Road.[1] The settlement was established in 1805 by Lawrence Hagar, a settler to Upper Canada from Pennsylvania.[2] The village was named Hagartown until 1836 when it was renamed to Palermo in honour of Horatio Nelson, Lord of Palermo.[2]
In 1869, the population was 300.[3] In 1875, the village had an iron foundry, two stores, and a hotel. At that time its population was 150.[4] By the 1870s, the village also had a wagon shop, blacksmith shop, harness shop, brick school house, churches, a telegraph office and drill shed.[1] The village, along with other villages in Trafalgar Township, became part of Oakville in 1962, when the township was amalgamated into Oakville.[5]