It was founded in 1794, and Thornhill's first settlers on Yonge Street in Thornhill were Asa Johnson (who settled on the Vaughan side) and Nicholas Miller (who settled on the Markham side). Of particular importance was the arrival of Benjamin Thorne in 1820, who was operating a gristmill, a sawmill, and a tannery in the community. The settlement came to be known as Thorne's Mills, and later, Thorne's Hill, from which its current name is derived. (Thorne would later commit suicide in 1848, after a serious wheat market crash.)
Between 1830 and 1848, Thornhill experienced a period of continued growth and prosperity. The business district of Thornhill developed on Yonge Street between Centre Street and John Street. Stagecoaches traveled between Holland Landing (Lake Simcoe) and York (Toronto) as Yonge Street's road conditions improved with new stonework. During this prosperous period, several churches, many of which are still standing today, were constructed.
Thornhill's location along Yonge Street, a major transportation route, proved to be beneficial to the community's growth throughout much of the twentieth century. The implementation of an electric street railway along Yonge Street in 1898 meant that, for the first time, it was possible for people to live in Thornhill and work in Toronto. By the 1920s, the prevalence of the automobile further facilitated travel along Yonge Street.
In 1931, Thornhill became a "Police Village"; before that time, Thornhill had no independent status and was split between the townships of Vaughan and Markham along Yonge Street, since the creation of municipal government in 1850. Before 1931, each township administered its own half of the village. The creation of the Police Village gave Thornhill its own political boundaries.
In 1971 however, York Region was created and the creation of a regional government administration effectively eliminated the Police Village of Thornhill. Its administration was reverted back to the newly-formed towns of Markham and Vaughan.
However, many residents still remain loyal to their community and still refer to the area as Thornhill, and not as Vaughan or Markham. While the old village of Thornhill is centred around Yonge Street between Centre and John Streets, it is typically said to be bounded by Dufferin Street to the west, Highway 7 to the north, Steeles Avenue to the south, and Leslie Street/Highway 404 to the east.