Gates Mills took its name from its founder, Holsey Gates, and from the importance of mills in the agricultural community. In 1826, the year the village was founded, a sawmill was built to increase the lumber supply and attract new settlers. In the following year, a rake factory was established, and by 1829 a gristmill was in operation. The Chagrin River was dammed to create a millrace that regulated the flow of water to the wheels that powered the mills. Shops and houses encircled the mills, which were the center of industry in Gates Mills.