Woodbine was founded in 1891 as a haven for Eastern European Jews who were being persecuted in the Czarist pogroms. The Baron DeHirsch Fund, organized by the millionaire railroad tycoon Baron DeHirsch, purchased 5300 acres of land in Dennis Township, Cape May County, NJ to start a settlement. Immigrants from Poland and Russia were invited to settle the new community. Within two years, they cleared the forest and built a town and thriving farms. 800 acres of land were set aside as town lots. The residential center of Woodbine still uses the same grid that was originally laid out in 1891. Using modern agricultural practices, the first colonists (Woodbine was sometimes called the "Jewish Colony" in the early days) turned Woodbine into a model agricultural community. Woodbine was incorporated as a Borough in 1903, and was no longer part of Dennis Township. Because most of the original settlers were Jewish, Woodbine became known as the "First self-governed Jewish community since the fall of Jerusalem".

The community started the Baron DeHirsch Agricultural College in 1894. Until it closed during World War I (1917), the college was a model of progressive education. The college and its graduates won many state, national, and international awards. World War I, however, signalled a change in the community from a community with an agricultural economy to one with a light manufacturing economy. The Bron DeHirsdch Agricultural College became what is today the Woodbine Developmental Center, a state run facility for training mentally-handicapped men. The Developmental Center is Cape May County's largest employer.

After World War II, many of the founding families left Woodbine for the new suburbs that were springing up around America's cities. At the time, new settlers arrived looking for a good place to live, this time from the American South and the Caribeean. They have settled into the community and helped created a vibrant, multi-ethnic community in the middle of the Cape May County mainland with the same spirit of Brotherhood that enlivened the original colonists.