From July 1863, in the first major engagement of the Waikato Campaign of the New Zealand Wars (the Battle of Rangiriri) on 20th November 1863), a party of 200-300 Waikato Maoris supporters of the Maori 'King Movement', fortified a position just south of Mercer, in an unsuccessful attempt to delay and frustrate the British Troops of General (Sir)Duncan Alexander Cameron. Soon afterwards, the British posted a detachment on the bluff close to Teoteo and armed it with two emplaced field guns.

From its beginnings as a military settlement at what was then the end of the Great South Road, Mercer became a river wayport in 1866, paddle steamers used to trade up the Waikato River to Ngaruawahia and Hamilton, and along the Waipa River as far as Pirongia. Mercer was initially known as Point Russell, after (Sir) Thomas Russell (1830 - 1904) Minister of Defence in Domett's administration, and the man responsible for the establishment of the Waikato Military Settlements.

It was later renamed after Captain Henry Mercer, of the Royal Artillery, whom was killed in the Battle of Rangiriri on 20th November 1863. The Maori name for the place is Te Paina, 'the point'.