Monterey was one of the four towns laid out by the Massachusetts Legislature in 1735 to develop and protect the lands along the wilderness trail which was then the only major route connecting the lower Housatonic Valley with the Connecticut Valley and Boston. Monterey was one of the two towns on the north of the trail and was the site of the original settlement of Tyringham of which it was then a part. The Great and General Court ordered the laying out of 63 home lots "in a compact and defensible form", one for each of the two ministers expected in the town, one for a school and one for each of the eventual grantees, who in turn had to provide 40 Sterling pounds security that they would settle on and improve their grants. This development made the trail safer and less difficult for travelers.

Just before the Civil War, Monterey became something of a resort town, along with many of its Berkshire neighbors, with summer homes and lots of boarding houses providing refuge for city folk searching for the clean, cool air of the mountains. In 1889, a tourist guide to the Berkshires described Monterey as "charmingly attractive", with one of the most beautiful of the area's lakes, Lake Garfield. After the first World War, this kind of visitor increased in numbers as did campers. Lake Buel, another handsome attraction, is partly in town and fishing in the Mill River for trout has been a sportsmen's lure.

Monterey Mass is located in Southwestern Massachusetts, bordered by Tyringham on the northeast, Otis on the east, Sandisfield on the southeast, New Marlborough on the south, and Great Barrington on the west and northwest. Monterey is 27 miles south of Pittsfield and 127 miles southwest of Boston.