The township, established in 1867, takes its name from Charles Gratiot, the Army engineer who laid out a stockade in 1814 to guard the point where Lake Huron empties into the St. Clair River. The name can mislead. The fort site and the Fort Gratiot Lighthouse are in the City of Port Huron, and the old village of Fort Gratiot was annexed by Port Huron in 1895. The township is a separate community just to the north.

Its own early history is quieter. Gardendale, near the middle of the township, was a Pere Marquette Railway station, and Keewahdin Beach developed as a Lake Huron resort in 1914. Keewahdin Road Beach and Fort Gratiot County Park give the township public access to the lakeshore.

Commerce sits inland, along 24th Avenue and M-25, which is also called Pine Grove Avenue. Birchwood Mall opened at the start of the 1990s and anchors the area, and big-box stores, smaller shops and hotels have gathered around it, with Krafft Road nearby. Together they make the township a trade center for the Blue Water Area, and much of the property here is retail buildings and outlots. I-94 and I-69 reach the Blue Water Bridge to Ontario just to the south.