There are three bands of Bay Miwok Indians associated with early Walnut Creek, the Saclan, whose territory extended through the hills east of present day Oakland, Rossmoor, Lafayette, Moraga, and Walnut Creek; the Volvon (also spelled Bolbon, Wolwon, and Zuicun) at Mt. Diablo; and the Tactan at Danville and Walnut Creek, on San Ramon Creek.
Today's Walnut Creek is located amidst the earlier site of four Mexican land grants. One of these land grants – measuring 18,000 acres (73 km2) – belonged to Juana Sanchez de Pacheco, who deeded it to her two grandsons. Ygnacio Sibrian, one of the grandsons, created the first roofed home in the valley in about 1850. The grant was called Rancho Arroyo de Las Nueces y Bolbones, named after the principal waterway, Arroyo de las Nueces (Walnut Creek) as well as for the local group of indigenous Americans (Bolbones). The Arroyo de los Nueces was named for the occurrence in the valley of the native species of walnut tree, the California Walnut.
With the coming of American settlers following the US-Mexico War, a small settlement called "The Corners" emerged, named because it was the place where roads from Pacheco and Lafayette met. The site of this first American settlement is found today at the intersection of Mt. Diablo Boulevard and North Main Street. The first town settler was William Slusher, who built a dwelling on the bank of Walnut Creek, which was called "Nuts Creek" by the Americans in 1849. In the year 1855, Milo Hough of Lafayette built the hotel named "Walnut Creek House" in the corners. A blacksmith shop and a store soon joined the hotel, and a year later, Hiram Penniman (who builtShadelands Ranch) laid out the town site and realigned the Main Street of today. Two decades later, the community changed its name from The Corners to Walnut Creek.
In December 1862 a United States Post Office was established, and the community was named "Walnut Creek". The downtown street patterns laid out in 1871–1872 by pioneer Homer Shuey on a portion of one of his family's large cattle ranches are still present today.
Walnut Creek began to grow with the arrival of Southern Pacific Railroad service in 1891. On October 21, 1914, the town and the surrounding area of 500 acres (2 km2), were incorporated as the 8th city in Contra Costa County.
A branch line of the Southern Pacific railroad ran through Walnut Creek until the late 1970s. The East Bay Regional Park District's Iron Horse Trail, used by walkers, runners and bikers, runs over what was portions of that branch line. The mainline of the Sacramento Northern Railway passed through Walnut Creek. Both railroads had stations here. Today, the Pittsburg/Bay Point – SFO Line line of the Bay Area Rapid Transit (BART) serves Walnut Creek with a station adjacent to Highway 680.
With the downtown opening of the Broadway Shopping Center (now Broadway Plaza), Contra Costa County's first major retail center, in 1951, the city took off in a new direction, and its population more than tripled from 2,460 in 1950 to 9,903 in 1960.
Today, Walnut Creek, the actual waterway, has been routed underneath downtown through a series of tunnels starting at the southwest end of Macy's and ending just southwest of Maria Maria Restaurant and bar.