When Europeans sailed up Queen Charlotte Sound for the first time they found an well established village at its head. This was known to the Maori as Te Wera a Waitohi, the burning of Waitohi, or simply Waitohi and had a population of around 200. Realising the value of the site for settlement The New Zealand Company sent Francis Bell to purchase the land from the Maori who agreed to move to Waikawa. In the next few years there seemed to be some doubt as to what the settlement should de called. Captain Steine had named it Horne Bay in 1832 but it was renamed Newton Bay in 1847. New Zealand Company officials suggested Cromwell and Beaconfield which were used briefly before Picton was finally adopted in honour of Sir Thomas Picton, the hero of Badajoz, one of the Duke of Wellington's generals in the Peninsula War. Sir Thomas died in the Battle of Waterloo.
By 1850 Picton was fully established and had begun servicing the antimony, copper and coal mines in the area as well as gold mining up the Pelorus valley. As the population and farming increased a number of processing units set up to service the town. Eventually the railway linking Picton to Blenheim and the rest of the country was built. This resulted in Picton becoming the main inter-island travel port.
Picton was made capital of the Marlborough province at about this time, leading to tense relations with Blenheim, not to be resolved until Blenheim was finally made capital. When it was realised that a more central location was required than Auckland for New Zealand's capital, again Picton was recommended, only to be abandoned in favour of Wellington.
Today Picton is an attractive town of around 4000 people with employment based around servicing the port and processing products from throughout the Sounds as well as servicing the thousands of holiday makers who visit the Sounds each year. There have been proposals to shift the rail port to Clifford Bay 14km south east of Blenheim, which would place more emphasis on tourism, however with the government purchase of rail services from Toll, this may be less likely.
The Interislander and Straitsman shipping services provide freight and passenger links between the North and South Islands through Picton, and cruise ships visit over the summer months. The Interislander also has the capacity to carry rail wagons and links the Main Trunk Line between the North and South Island. The Trans Scenic passenger train service runs from Picton to Christchurch.
An old freezing works site at Shakespeare Bay has been converted into a second port for log export. Use of methyl bromide as a fumigant at the facility has caused a considerable amount of controversy.
Picton has a small shopping mall, Mariner's Mall, including a supermarket, banks and other retail outlets. A number of shops sell crafts and souvenirs targetted at the tourist market, and there are also a number of cafés and bars.
Visitor attractions include the Edward Fox, a wooden sailing vessel that has been preserved and is on display, an oceanarium, cinema, and mini-golf near the foreshore. Walkways in Victoria Domain and Esson's Valley provide an opportunity to enjoy native forest.