St. Paul's Lutheran Church has its roots as far back as 1875 when a small group of German Lutherans held services at the Swedish Lutheran Church in Watertown. The first pastor to serve the group was Rev. W. Fredrich from Waconia, who held services for the group once a month. When the Swedish Lutheran Church installed their first pipe organ, it forced them to move to the Free Mission Church because they had no one who could play the pipe organ. In 1888 St. Peters, in rural Watertown, called their first pastor, he conducted services for the early members of St. Paul's twice a month on Sunday afternoons. Baptisms, Weddings, Communion, and Funerals were conducted in Watertown. However, the children had to walk 3 miles to St. Peters school for the two years of confirmation instruction. About 1920 the members of St. Paul's moved back to the Swedish Lutheran Church. Later while Pastor Karl Rudolph conducted the service, he suggested they adopt the name of St. Paul's Lutheran Church. In the later 1940's the group under the pastorate of Rev. John S. Spomer, began holding services in the Community Church (now a private residence). St. Paul's Lutheran Church was incorporated on March 5, 1949. At that time we shared Pastor John Spomer with St. Peters Lutheran Church of rural Watertown.

With membership of 215 people, ground was broken on June 7, 1949 for a school building with church facilities on the lower level and two classrooms on the upper level. In September, 1949, the newly formed congregation opened its first Christian Day School. The building was not ready to be occupied, so classes were held in the Village Hall. Mr. Earl Ortlip of Waconia was the first teacher with 45 children enrolled. Dedication of the building was on January 22, 1950. Before a year had passed, St. Paul's had acquired a teacherage for our first principal, Benjamin Buck. In 1950 a Kindergarten class was started. This class met for six weeks in the spring. The first Sunday School classes were started in November 1952. Members of the congregation were also active on the planning committee for a new Christian high school in Mayer, called Mayer Lutheran High School, at this same time.

Pastor Spomer served until 1956 when he accepted a call to Chicago, Illinois. Pastor Louis Wetzel was called from Atwater, MN to serve both St. Paul's and St. Peter's Churches.

During the 1960's many church planning meetings were held and in 1968 a church steering committee was formed to plan the building of a church. In 1965 Pastor Wetzel accepted a call to Florida. By this time St. Paul's had grown to the point where one pastor could no longer adequately serve both St. Peters and St. Paul's congregations. Therefore Pastor Henry Mueller was called from Nebraska and became the first pastor who solely served St Paul's. A parsonage in Watertown was purchased at that time at 505 Franklin Avenue, which was later sold in 1998.

In 1969 St. Peters congregation joined St. Paul's congregation to organize and consolidate the schools. The result of this was the St. Paul's and St. Peter Interparish School. A full time half day Kindergarten was added in 1972.

On August 17, 1969, a ground breaking ceremony was held for the present church building. Some of the building project highlights were watching the beams being raised into place and finishing the roof on Christmas Eve. The new church building was dedicated on July 26, 1970 with a membership of 495 people.