The city was founded by John C. Williams, formerly of Detroit, Michigan, who purchased the land in 1876 and, with the help of Peter Demens, was instrumental in bringing the terminus of a railroad there in 1888. St. Petersburg was incorporated on February 29, 1892, when it had a population of only some 300 people.

It was named after Saint Petersburg, Russia, the birthplace of Peter Demens. A local legend says that John C. Williams and Peter Demens flipped a coin to see who would have the honor of naming the city. Peter Demens won and named the city after his birthplace, while John C. Williams named the first hotel after his birthplace, Detroit. The Detroit Hotel still exists downtown.

Dredging of a deeper shipping channel from 1906 to 1908 opened St. Petersburg to larger shipping. Further dredging improved the port facilities through the 1910s.

In 1914, airplane service across Tampa Bay from St. Petersburg to Tampa and back was initiated, generally considered the first commercial airline. The company name was the "Airboat Line" and the pilot was Tony Jannus Air service was discontinued in 1924 with the opening of Gandy Bridge, the first across Tampa Bay, which allowed automobile traffic between the two cities. The Tony Janus award is presented annually for prestigious work in the airline industry.