Northwood is well known for its lakes, with both seasonal and year-round residences. The larger lakes and ponds include Bow Lake, which is part of the Piscataqua River drainage basin, and Northwood Lake, Pleasant Lake, Jenness Pond, Harvey Lake, and Long Pond, all of which drain to the Suncook River, a tributary of the Merrimack River. The highest point in Northwood is Saddleback Mountain.
First settled in 1763, Northwood was incorporated on February 6, 1773 by Colonial Governor John Wentworth, when a large tract of land called "North Woods" was separated from Nottingham. Around 1800, the Portsmouth to Concord Turnpike was built, and the town began to prosper. Numerous taverns accommodated sledge and stage passengers. At one time, there were some 12 sawmills in the town, 5 of which were replaced by shoe factories during the latter half of the 19th century. By 1920, however, the last shoe factory had closed. More recently, the town has been a popular vacation spot, being home to 9 lakes and many antique shops.
Four Northwood districts along Route 4 are considered historic sections of town. They are, from east to west, East Northwood, Northwood Ridge, Northwood Center and Northwood Narrows. The town is home to Coe-Brown Northwood Academy, founded in 1867.