Grimmen was founded during the Ostsiedlung, when about 1250 merchants and craftsman from Lower Saxony, Westphalia and the Lower Rhine settled the site which then was part of the Principality of Rügen. The first document mentioning Grimmens is of 1267. In 1287, a report mentions Vogt Berthold taking office in the town, and further mentions that Grimmen had already been granted Lübeck law before. The actual charter is lost, thus the exact date when the town received Lübeck law remains uncertain. Accordingly, the 700th anniversary was celebrated in 1987. Since 1325, Grimmen belonged to the Duchy of Pomerania.
During the Thirty Years' War, the town was looted several times. After the war, Grimmen became part of Swedish Pomerania, a dominion of theSwedish Empire. From 1695 to 1697, mayor Johannes Flittner cruelly pursued alleged witches; at least seven were executed. In 1797, a large fire destroyed almost the entire town. In 1800, Swedish kingGustav IV Adolph visited Grimmen and resided in the so-called king's house. Following the Congress of Vienna in 1815, Swedish Pomerania with Grimmen became part of the PrussianProvince of Pomerania. An administrative reform of 1816 made the town capital of a Kreis. In 1853, cholera broke out.
At the end Second World War, Grimmen surrendered to the Red Army without fighting in April 1945. In the 1960s, numerous new factories and agricultural enterprises were set up, resulting in prosperity and physical growth of the city. After East Germany's Communist regime collapsed following Die Wende movement of 1989, the town's old buildings were reconstructed. After a reorganization of the Kreis districts in 1994, Grimmen became capital of newly created Vorpommern-Rügen.
The first chapters of Dennis Wheatley's WWII spy thriller "They used dark forces" are set in 1944 Grimmen, where Wheatley's British agent Gregory Sallust arrives on a secret mission in Nazi Germany.