European settlers reached the area in the late 1790s, and the Town of Division was formed on April 7, 1817. Immigrants from Massachusetts and Connecticut (where there are older towns of Groton) changed the name. Situated on the Owasco Lake watershed, the town has rolling hills and valleys. The principal streams are Owasco Inlet, which drains north, and Fall Creek, which drains south. The village is situated in a dramatic valley made by the inlet. The town is bisected by New York State Route 38, which runs north and south. North of the Old Peruville Road intersection of NYS Route 38 marks what was once the boundary between the Cayuga and Onondaga nations (a boundary respected by both).
Throughout its history Groton has had many good-sized companies, most prominently the Smith-Corona Company, which made typewriters. Manufacturing provided an income to its residents as well as products that were sold locally, nationally, and internationally. The town has attempted to revive manufacturing in the form of factory that makes school buses, but this has not approached the scale of older industries.
In 2014 the Food Hub opened in Groton, an innovative farm-to-market industry that supports area farmers by providing a place to sell produce close to home, and supports people with barriers to employment by providing useful work. Sponsored by Challenge Industries, the Food Hub has a "double bottom line- social and financial" and aims to excel in both areas.
The population was 5,950 at the 2010 census, of which 2,367 reside in the village.