Agua Prieta, Sonora began growing at the end of the 19th century as railroads were built between Douglas, Arizona, and Nacozari, Sonora, to transport minerals. As a result, the first settlers of the town were those employed by the U.S. mining company Phelps Dodge Corporation, which was based in Douglas, Arizona.

The town was founded in 1899 as the Commissary of Fronteras, but did not become an independent municipality with its current name until August 28, 1916. Rodolfo L. Márquez was the new municipality's first president.

It rose to the status of villa (town) on May 8, 1933, and it was officially placed in the category of city relatively recently, on November 11, 1942. Agua Prieta played an important role in the Mexican Revolution.

Plutarco Elías Callesand Lázaro Cárdenas, two future presidents of Mexico, both lived in the town during its early years. In 1916, Pancho Villa made a night attack on Agua Prieta that was repelled by the forces of Álvaro Obregón, assisted by large searchlights powered by American electricity.

In 1920, the Plan de Agua Prieta was signed in a curiosity shop near the international border, which called for the repeal of the government headed by Venustiano Carranza. The army headed by Álvaro Obregón eventually deposed Carranza.