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Established in 1661 and named for Lady Grace Talbot, sister of the second Lord Baltimore, the county soon became the geographical and spiritual heartland of the Eastern Shore. The county town, first known as Talbot Courthouse and later as Easton, was known as the "East Capital" of Maryland because the Eastern Shore's courts and governmental offices were located there. Easton had the Shore's finest bank, its first newspaper, its first Federal offices, its first brick hotel.
For a century Talbot life centered around tidewater and tobacco, which served as money and was traded for English manufactured goods with ships which anchored directly off the plantation wharves. Its first town, Oxford, laid out in 1683, served as a port of call for vessels from all over the world. Talbot County had one of the highest percentages of "free blacks" in the country in the years of slavery. War of 1812 was fought on the Chesapeake Bay. Local newspaper accounts of the time hearald the bravery of the citizens whose cannon fire had force the British ships to retreat. Later legends developed that lanterns hung in trees had caused the British cannons to overshoot the town.

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