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Waterbeach is on the Car Dyke, a Roman waterway whose course can be traced as far as Lincoln. Recent archaeological investigations have found extensive evidence of Roman settlement at the southern end of the village.

Waterbeach appears in the Domesday Book as Utbech. In the 12th Century, the Knights Templar were located at Denny Abbey located to the north of the village. The parish contains two Scheduled Ancient Monuments: Denny Abbey (which houses the Farmland Museum) and the site of Waterbeach Abbey (near the present church).

Waterbeach expanded considerably in recent years due to the economic growth in the region and has become increasingly a dormitory for Cambridge and, to some extent, London.