Alderwood was originally known as New Toronto Park or New Toronto Heights, or simply as "the place above the tracks". Alderwood was the home of the six O'Connor sisters who achieved great fame in the 1910's touring North America's vaudeville theatres. The O'Connor sisters were often featured on the same bill with stars such as Jimmie Durante, Al Jolson and Sophia Tucker.
Alderwood's farms began to be subdivided for residential development in the 1920's however most of this neighbourhood's development occurred after World War II. Many of the streets in Alderwood are named after the original farmers in this area including Brown, Evans, Lunness and Horner.
The Alderwood name officially came into use in 1933 when the local post office was opened. Robert Johnson a long time Alderwood resident, is credited with originating the name Alderwood. He derived this name from the First Nations word "Etobicoke," meaning "the place where the alders grow".