The first settlers arrived in Venice during the late 1860s, after Congress passed the Homestead Act, which offered 160 acres of land to homesteading families. Venice historical records show that the John and Eliza Webb, from New York, were the first to settle in what is now the Osprey area, north of Venice.

John Webb and his family established a homestead at Spanish Point in Osprey in 1867. In 1881 John Webb became a Postmaster and he requested a Post Office be placed at Spanish Point so the family wouldn't have to sail the 15-20 miles to Sarasota to get their mail. The US Postal Service informed him that the place needed to have a one word name, so John chose "Osprey", no doubt inspired by the birds so commonly seen over the bay. The Webb family sold the homestead to Bertha Honore Palmer in 1910. She included it in her winter estate which she named "Osprey Point".

Shortly after other families began arriving from the Northeast, including Robert Roberts, who Roberts Bay is named after. Another major contributor to the growth of the area was Frank Higel, who originally lived in Venice, Italy. When the time came to name the town upon setting up a post office, Higel submitted the name of Venice because the coastal town reminded him of his own hometown with the many intricately woven canals. The area originally named Venice is actually the Nokomis area now, but the locale of Venice was changed after a wealthy widow, Bertha Palmer arrived from Chicago in 1910 and acquired 140,000 acres of land in the Manatee County area. With her influence, the area was able to establish a railroad terminal near Roberts Bay and Palmer also managed to have the name of Venice relocated to the current Venice area, since the main railroad station and post office were located there.

Another important figure that move to the area was Dr. Fred Albee and his wife Luella. Dr. Albee is responsible for recruiting John Nolen, a well-known city planner during the 1920s to begin formulating plans for the town to mimic a Northern Italy town. Albee bought a considerable amount of land, now known as the Venice/Venice Beach area, south of Roberts Bay from the Palmer family and requested Nolen to begin building plans. Much of the city plan that currently exists in the downtown area is the original building plan of Nolen and Albee. A building plan so well thought out was not common in smaller coastal towns in the 1920s, which makes Venice a unique historical gem.