The peninsular fishing village of Upper Prospect lies within a larger area known as Prospect. It is located at the end of a 12 km road that turns off Route 333. The Mi'kmaq knew the Prospect area as Nospadakun, meaning "a herb mixed with tobacco" and Coolen's Hill was once their summer camp. It is also believed that Norsemen had visited the shores of Prospect Bay.

In 1744 the area became Prospec and was renamed Prospect by British settlers in 1754. Some families arriving in the Prospect area were descended from the Foreign Protestants of Lunenburg and most were of Irish origin: the Brophy, Christian, Connor, Coolen, Duggan, Kiley, Mullins, O'Brien, Powers, Redmond, Shea and Purcell families.

Early arrivals Samuel and Joanne White settled on Betty's Island off the coast. It was named for their daughter. On the island is a lighthouse that has been in operation since 1875. The first lighthouse keeper was Patrick Christian who died on Oct. 9, 1904. He was followed by John L. Christian, Patrick Edward Christian, Jack Clancey, George Coolen, and Victor Kiley, who was there until 1966. Eldon Bartlett was the last Lighthouse Keeper, he served from 1969 to 1978, when the light was automated. The original tower was tapered square, made of wood, and was white with two red bands. It sat on top of the keeper's house.

Between 1752 and 1754 Planters settled in the area. These people experienced contact with the Mi'kmaq, not all of which were pleasant. There were hostile raids while the natives were allied with the French settlers.

In 1787 the Connor family was granted Calatian Island. Timothy Mullins received a land grant in 1788 that included Mullins Island. In 1808, the William Coolen family from Newfoundland received a land grant in Upper Prospect after having already lived there for a number of years. The Powers family arrived in 1811. Roger Power was a fisherman. Two Irish families headed by merchant Patrick Purcell and James Shea arrived in 1816. Dennis Brophy, a Sergeant in the NS Regiment was granted a fishing lot in 1819. In the 1820s, the residents petitioned the government to build a school but the request was denied, so the residents built a school themselves.

James O'Brien with his wife and 9 nine children arrived in 1831. In the mid-1870s, William and Nicholas Christian and James Coolen received grants, after having already lived there for at least 50 fifty years. James Noonan moved from East Dover to Upper Prospect Village in the mid-1800s. He married a local girl named Margaret and they had three children.

In 1863 business received a great impetus when the American fishing fleet began to call for supplies. The first trawler to call at Upper Prospect was the "Republic", a vessel of 65 tons. The next one was the "Bloomingdale" of 70 tons commanded by Capt. Peter Coffey. These were followed by the "Gettysburg" under the command of Capt. John Stewart. The number of these vessels soon increased, as many as forty-five being anchored at any one time. These trips brought much needed money. In 1883, the village population had risen to 1,140 residents.

From 1910 to 1920 Joseph Doherty brought mail and merchandise from Halifax to the village twice a week. Street lights were installed in 1947.

The village was the center of a large Catholic Parish and featured the Our Lady of Mt. Carmel Church, a rectory, church hall and nunnery for the Sisters of Charity who were very influential in the community from 1876 until the 1960s. Most residents practiced Catholicism. In the 1960s, the parish moved its center of activity from Upper Prospect to Shad Bay.

What started as a small fishing village had blossomed into a community with a cannery, bowling alley, taverns, and a bowery for special functions, church suppers and dances. However, with the collapse of the fishery in the late 1800s after a period of decline, people started moving away from Prospect into Halifax or Boston and New England.