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Evidence suggests that on or around 1749, prior to settlement by Europeans, a large battle occurred between a band of Cherokee Native Americans and victorious Miami tribe and Shawnee tribe Native Americans in what is now the city of Fort Thomas. As many as 600 graves of slain warriors have been unearthed by archeologists there; although the battleground area has been thoroughly combed for artifacts and remains over the years, it is still not uncommon to find arrowheads and other artifacts from the past while gardening or hiking the woods and streambeds throughout the city.

In 1887, a site was needed to house a United States Army post to replace Newport Barracks located in the adjoining city of Newport, Kentucky. Built in 1803, Newport Barracks replaced the smaller Fort Washington, located across the Ohio River in Cincinnati, Ohio. That army post was located at the junction of the Licking and Ohio Rivers, but it was prone to flooding and flooded numerous times during the early 1880s. A new, less flood prone location was sought. General Philip Sheridan personally selected 11 acres (4.5 ha) of the city and dubbed the area the Highlands, predicting it to become the "West Point of the West." The new post was named Fort Thomas in honor of General George Henry Thomas.

The area has many remnants of this era with a 102-foot (31 m) high Stone Water Tower as a familiar landmark which stands at the entrance to Tower Park. It was the 16th structure built on the grounds of the Military Reservation. It encloses a standpipe which has a capacity of 100,000 gallons, pumped from the Water District reservoirs just across South Fort Thomas Avenue. In 1890 when the military base was established, such provisions for water supply was necessary as there was no other water tower in this area. Cannons that were captured in Cuba's Havana Harbor during the Spanish–American War rest on stone platforms in front of the Tower. The dates marked on these cannons, reflecting the date they were made in Barcelona, Spain, are "1768" and "1769."

The U.S. 6th Infantry Regiment moved to Fort Thomas, where it remained until called to action again in June 1898, in the Spanish–American War.

Samuel Woodfill was transferred to the Fort Thomas Army post in 1912. He married Lorena Wiltshire on Christmas Day in 1917 and they purchased a house near the fort. In World War I he was courageous, leading his men against the Germans. His bravery earned him many medals and awards and he was described as the most decorated soldier of the war. In civilian life, however, he struggled to pay his bills. He was unsuccessful at creating an orchard, and worked as a carpenter, a watchman and a guard. His wife died in March 1942, but two months later, the Army commissioned Woodfill and another World War I hero, Alvin C. York as Majors to build morale and promote enlistments. Woodfill retired again in 1944, but memories of his wife in Fort Thomas caused him to return to Indiana, where he was born.

On February 25, 1937, Paul Tibbets enlisted here as a flying cadet in the United States Army Air Corps. During the last days of World War II, Paul became known as the pilot that dropped the first atomic bomb on August 6, 1945.

Fort Thomas served as a depot, induction center, and military hospital. Most of the garrison was transferred to the Veterans Administration in 1946, but military activities continued until the fort was closed in 1964.

As of the census of 2010, there were 16,325 people, 6,787 households, and 4,219 families residing in the city. The population density was 2,909.8 people per square mile (1,123.2/km2). There were 7,028 housing units at an average density of 1,239.8 per square mile (478.6/km2). The racial makeup of the city was 96.1% White, 1.3% African American, 0.1% Native American, 0.9% Asian, less than 0.01% Pacific Islander, 0.4% from other races, and 1.2% from two or more races. Hispanic or Latino of any race were 1.4% of the population.

There were 6,787 households, out of which 30.1% had children under the age of 18 living with them, 48.8% were married couples living together, 9.7% had a female householder with no husband present, and 37.8% were non-families. 32.6% of all households were made up of individuals, and 12.5% had someone living alone who was 65 years of age or older. The average household size was 2.35 and the average family size was 3.03.

In the city the population was spread out, with 24.2% under the age of 18, 7.7% from 18 to 24, 25.1% from 25 to 44, 27.4% from 45 to 64, and 15.6% who were 65 years of age or older. The median age was 39.8 years. For every 100 females, there were 90.6 males. For every 100 females age 18 and over, there were 84.5 males.

The median income for a household in the city was $49,575, and the median income for a family was $63,006. Males had a median income of $43,733 versus $30,209 for females. The per capita income for the city was $26,657. About 2.8% of families and 4.8% of the population were below the poverty line, including 4.7% of those under age 18 and 3.2% of those age 65 or over.