Excelsior was founded in the 1850's as a destination for vacationers, primarily from the cities of Minneapolis and St. Paul. Throughout the years, Excelsior's Water Street has been the home to many businesses, including hotels, restaurants, and merchants. Today, Excelsior works hard to maintain its historical identity while renewing various elements of the downtown area.

Excelsior was home to the Excelsior Amusement Park from 1925 to 1973.

The Minnehaha Steamboat, a Steamboat used for passenger travel on Lake Minnetonka near the turn of the century, was raised from the bottom of Lake Minnetonka, restored, and is now available for rides from the Excelsior port during the summer.

Legend has it that the city of Excelsior resident Jimmy Hutmaker, was the inspiration behind the Rolling Stones song "You Can't Always Get What you Want" after an encounter during a 1964 Stones concert at the drug store."Mr. Jimmy", as people called him, Died on October 3rd, 2007.

President Gerald Ford's golden retriever Liberty was purchased in 1974 from Avis Friberg who lived in the town.