The earliest inhabitants of Arroyo Grande Valley were the northern or Obispeno
Chumash Indians. The Arroyo Grande area was still occupied by the Chumash at the time of contact with the first Spanish explorer,
Juan Cabrillo. During the colonial settlement of California, the Arroyo Grande Valley became separated into two major ranchos which were granted by the Mexican government around 1840. In 1862, the
San Luis Obispo Board of Supervisors established the
township of Arroyo Grande. Businesses developed along a road called Branch Street to serve local agriculture. A
railroad depot was built in 1882. The city of Arroyo Grande was
incorporated on July 10, 1911. Arroyo Grande experienced rapid growth in the 1970s and 1980s, partially due to the expansion of the
wastewater treatment plant, under an
EPA Clean Water Grant, that removed a growth constraint. This federal grant program required preparation of an
Environmental Impact Report, which provided much of the initial environmental database for Arroyo Grande. However, the economy and rising property values has had detrimental effects. Arroyo Grande is currently declining at a rate of -0.26% annually and its population has decreased by -1.52% to 18,155 in 2026 from the most recent census, which recorded a population of 18,436 in 2020.. ==The Village==