Chesapeake City was incorporated in 1849. Chesapeake City is one of 157 municipalities in Maryland. Municipalities, independent of size or wealth, are recognized along with each of the counties as co-equal local government entities under Maryland state law.

Today, Chesapeake City is the only town in Maryland that is situated on a working commercial canal. Most of its interesting 19th-century architecture remains intact, and the area that encompasses it on the south bank has been placed on the National Register of Historic Places. At the city dock, pleasure boaters find a tranquil harbor off the busy Inter-Coastal Waterway, of which the canal is a major element. From the basin, visitors can walk easily into town or tour the Canal Museum, where the story of the canal is told and the massive waterwheel and steam engines that filled the locks stand in mute testimony. Outside is a replica of the lighthouses that lined the canal in days gone by.

Chesapeake City now is a destination widely known for its unique inland view of ocean-going vessels, for the proudly preserved and displayed reminders of its history, and for its friendly hospitality. Travelers discover fine dining, picturesque stores, outdoor concerts, seasonal events, and outstanding bed & breakfasts. From its origin as a rough and rowdy boom town, through an era of dispiriting depression, Chesapeake City has emerged as a charming and interesting place with a warm welcome for its visitors.