Located on Boggy Bayou, which opens into Choctawhatchee Bay, Niceville Florida was originally called Boggy, Florida. It was part of Walton County until Okaloosa County was formed in 1915 from portions of Santa Rosa County and Walton County. In the 1840s William Nathey from England settled at the head of Boggy Bayou. He built the gristmill in 1857. The old mill site is on the south side of Trout Lake on Eglin's Golf Course where Mill Creek flows out. The mill was still standing in 1939. The millstones are Niceville's oldest artifacts from the pioneer settlement.
During the Civil War the area was actively contested by Union and Confederate forces. Union forces were deployed to end Confederate blockade-running and to destroy salt-works on the Choctawhatchee Bay. Families in the area had members that served on both sides. Some of their descendants reside in Niceville today.
Mail service to Boggy was established by Law Number 16, the Acts and Resolution adopted by the Legislature of Florida on July 21, 1868. This is the date observed as Niceville's official date of establishment. The Boggy Post Office was located about 100 feet from a wharf close to where Mill Creek flows into Boggy Bayou. Boggy was assigned Election Precinct Number 9. Boggy appeared on the 1895 map of Florida.
Some families that homesteaded along Boggy Bayou in the early 1900s include:
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- Parrish @(Model.BulletStyle == CivicPlus.Entities.Modules.Layout.Enums.BulletStyle.Decimal ? "ol" : "ul")>
Homesteaders on Rocky Bayou included Bolton, Burlison, and Lancaster. Land was withdrawn from settlement in 1906 and placed under the Forest Service as the Choctawhatchee National Forest. The formation of the Choctawhatchee National Forest, the sawmills, and the naval stores industry were important in the development of Niceville.