Laurel was formed from land bordering the Patuxent River and owned by the Snowden family. A large flour mill in Laurel circa 1811 grew to a small cotton mill by the 1820s. In 1835, not only did the Baltimore to Washington rail line open, but the Patuxent Manufacturing Company was chartered and the mill expanded significantly. Owners of the mill needed housing for its workers so housing was built for over 300 workers. Cotton was transported down current day Main Street and then by rail to Baltimore and shipped to other parts of the country and overseas. A large dam was built in 1850 to help provide irrigation to crops since Laurel had a large concentration of agricultural activities.
The community was originally known as Laurel Factory. Laurel Factory was a true small town as it had a school, shops and churches. Mill owners owned just about all of their workers housing until the 1860s. Even though Laurel was a divided community during the Civil War, it had many Southern sympathizers. Union soldiers patrolled the railroad, and for a time there was also a Union hospital. During the latter half of the 19th Century, manufacturing played a less important role in the community. Laurel began evolving into a suburban town. Many of its residents commuted by rail to jobs in Washington or Baltimore. The town was incorporated in 1870 and reincorporated in 1890 to coincide with a new electric power plant and paved streets.
In 1890, Prince George's County chartered its first national bank -- Citizens National Bank which operated on Main Street. Citizens National Bank retained its name until it was bought by PNC Financial Services in 2007. Branch services are still provided from the original building today.