The village was originally known as Rustfield for Henry Rust, a sea captain from Salem, Massachusetts, and the first saw-and gristmill owner. As the story goes, the founders intended for the town to be renamed Norage, which means falls in the language of the Abenaki Indians. Its citizens called their home by this name in 1795 when they petitioned Massachusetts for incorporation. Perhaps, due to a copying error at the state level, the legislature chartered the town in 1797 as Norway and so it remains. 

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The village has been a hub for the area for centuries, as farmers came to trade their goods on Main Street and supply a local cannery. Laborers came to work in the dozen or more factories, including a shoe shop, a tannery, a box factory and several wood turning mills, the last of which only recently closed its doors. Known for much of the early 20th century as the Snowshoe Capital of the World, Norway was put on the map when snowshoes made by local hero Mellie Dunham made their way to the North Pole with the Peary expedition of 1909. The snowshoe industry thrived here during WWII due to government contracts. Dunham went on to become one of the country's foremost fiddlers and his legacy is celebrated to this day.

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The historic architecture that now defines Norway is a testament to the Great Fire of 1894. After most of the town burned, it was quickly reconstructed in the latest brick and wood styles of the day. According to the Maine Historic Preservation Commission, Norway's buildings include some of the best examples of period architecture to be found in Maine, resulting in its designation it as an official National Historic District.