Waterloo took its name from the Battle of Waterloo in 1815, when Allied and Prussian forces under the Duke of Wellington and Blücher defeated the French forces under Napoleon Bonaparte.

In the 1820s Waterloo began supporting industrial operations including the Fisher and Duncan Paper Mill and the Waterloo Flour Mills owned by William Hutchinson and Daniel Cooper. William Hutchinson, superindendent of convicts and public works, had been granted 1,400 acres (5.7 km2) of land in 1823. He sold Waterloo Farm to Daniel Cooper (1785-1853) and Solomon Levey (1794-1833). Cooper later bought out Levey’s share and on his death the Waterloo Estate passed onto his son, also named Daniel Cooper, who was the first speaker of the New South Wales Legislative Assembly.