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The town is named after the German city of Hanover. The area was first settled in 1832 by John and William Hespeler, who came from Baden-Württemberg, Germany. They were soon joined by other settlers from Germany and England. In 1837 a group of Mennonites arrived to settle on land east of the village; they formed the nucleus for what would become one of Ontario's largest Mennonite communities at nearby Steinbach (founded as "Neu-Stettin" in 1840). In 1842 George Brouse established a post office which he called "Hanover"; it operated until 1914 when mail service was transferred to Walkerton under that name due to confusion with another Hanover located near Waterloo County (now part of Cambridge). A second post office opened in 1850 under the name "Hespeler", but closed two years later because there were too few residents living within its boundaries; it reopened again briefly between 1863–1864 before closing permanently around 1865.