Euro-Canadian settlement in the area began around 1889 under the name Norma. When the Calgary and Edmonton Railway (a subsidiary of the Canadian Pacific Railway) laid tracks nearby in 1893, some settlers relocated closer to the railway line. A fire shortly after destroyed much of the original Norma settlement, leading the surviving residents to settle permanently around the new site.

In 1907, early settler Elias Bricker established the area's first post office. Multiple stories exist regarding the name Aldersyde: some attribute it to early Scottish settlers referencing a Scottish location or Annie Swan's 1883 Scottish novel Aldersyde; others suggest landowner J. D. O'Neal named it for the local abundance of alder trees.

Community life grew around the turn of the century. The Mount View Mennonite Church opened around 1901–1902, alongside a nearby cemetery. The one-room Maple Leaf School opened in 1903 to serve local farm families.

In 1911, the CPR constructed the Kipp–Aldersyde line (connecting Aldersyde to Vulcan and Lethbridge). This established Aldersyde Station as an important regional railway junction and grain-shipping point for southern Alberta farmers.

As rural populations consolidated in the middle of the 20th century, local facilities shifted. The school closed in 1953 and was repurposed as the Aldersyde Community Hall. The Mount View Mennonite Church closed in 1974, with maintenance of its historic cemetery assumed by Trinity Mennonite Church.

Due to its strategic location at the junction of Highway 2 and Highway 2A, Aldersyde developed into a commercial and industrial service zone within Foothills County. It hosted a short-lived magnesium smelting plant in 1990–1991, and in recent years has attracted major energy projects—including the 81-megawatt Foothills Solar project commissioned by TC Energy in 2024.