The name Hampstead comes from the Anglo-Saxon words ham and stede — a cognate of the modern English word "homestead." The settlement appears in a grant by King Ethelred the Unready to the monastery of St Peter's at Westminster in 986 AD, and in the Domesday Book of 1086. Mesolithic flint tools found on Hampstead Heath indicate human activity around 7000 BCE; Roman-era cinerary urns discovered near Well Walk suggest a possible Roman settlement or road. Elegant housing grew along Church Row and New End Square in the 18th century, supplied by chalybeate springs — mineral water impregnated with iron — that Hampstead's trustees began advertising as medicinal in 1700. The spa was demolished in 1882, though a water fountain remains. Hampstead expanded substantially after the Charing Cross, Euston & Hampstead Railway opened in 1907, connecting it to central London in minutes.

Hampstead has been home to more Prime Ministers, and contains more millionaires within its boundaries, than any other area of the United Kingdom, according to figures from 2004. The roster of notable residents is difficult to summarize. Sigmund Freud arrived in 1938, fleeing the Nazis, and died at 20 Maresfield Gardens in 1939. T.S. Eliot lived here; so did George Orwell, Agatha Christie, and John Keats, whose house on Keats Grove is now a museum. Helena Bonham Carter, Elizabeth Taylor, Ricky Gervais, and Harry Styles have all lived in Hampstead. After 1917 and again in the 1930s, the village became a base for avant-garde artists and writers, sheltering émigrés from the Russian Revolution and later from Nazi Europe. The Isokon building on Lawn Road, a Grade I listed experiment in modernist collective housing designed in 1932, once housed Agatha Christie, Henry Moore, Ben Nicholson, and Walter Gropius simultaneously.

The area has given its name to a specific political type: the "Hampstead Liberal," wealthy, educated, progressive in principle, comfortable in practice. The term was satirised in the 1960s by the Daily Telegraph columnist Peter Simple, who invented Lady Dutt-Pauker — an aristocratic socialist whose Hampstead mansion, Marxmount House, displayed Bukharin's false teeth alongside Ming vases. The New Yorker's Michael Idov later described the community as "the citadel of the moneyed liberal intelligentsia, posh but not stuffy." During the 2016 Brexit referendum, 75% of voters across the London Borough of Camden voted to remain in the EU, and Hampstead became an archetype of the Remain vote — repeatedly contrasted with post-industrial northern towns like Hartlepool and Hull that voted to leave.

Hampstead's relationship with its heath — the 320-hectare ancient parkland that separates it from Highgate — is intimate and defining. The view from Parliament Hill, legally protected, takes in St Paul's Cathedral, Canary Wharf, and the full London skyline. Three open-air swimming ponds on the Heath have served Londoners since the 17th century, originally built as reservoirs for drinking water. Summer evenings on the slopes below Kenwood House bring lakeside concerts; the FT Weekend Festival fills the lower Heath. The Spaniard's Inn on Spaniard's Road claims that the highwayman Dick Turpin once took refuge there — which may or may not be true, but which Hampstead has never seen fit to deny. The Holly Bush, gas-lit until recently, sits on Holly Mount above the High Street and has been making the same argument for the village's worth since 1643.