The German word Heide means "heath". In the 15th century four adjoining villages decided to build a church in the "middle of the heath". This remained the town's name to date. The exact foundation date is now unknown, but by 1447 Heide was already the main village of Dithmarschen. At this time Dithmarschen was an independent peasant republic. Heide became a town in the 19th century.
Heide has the largest un-built-upon market square in Germany, with 4.7 hectares. It is used primarily as a parking lot and has approximately 500 parking spaces. In 2016, the city staged 3 car-free Sundays on the market square for the first time.