Gruetli was founded by German-speaking Swiss immigrants in 1869. The town was part of a greater initiative— conducted by an organization known as the Tennessee Kolonisation Gesellschaft— to establish Swiss colonies atop the Cumberland Plateau in Tennessee. Gruetli was probably named after a commune in the Swiss canton of Glarus. Peter Staub, a member of Knoxville's thriving Swiss community, helped purchase the initial tract of land for Gruetli. The land was advertised in Switzerland, where the opportunity for a new start appealed to many families struggling with difficult economic conditions in Europe.