The origins of Amsterdam are linked to the development of a dam on the Amstel River called Amestelle, meaning 'watery area', from Aa(m) 'river' + stelle 'site at a shoreline', 'river bank'.[38] In this area, land reclamation started as early as the late 10th century.[39] Amestelle was located along a side arm of the IJ. This sidearm took its name from the eponymous land: Amstel. Amestelle was inhabited by farmers, who lived more inland and more upstream, where the land was not as wet as at the banks of the downstream river mouth. These farmers were starting the reclamation around upstream Ouderkerk aan de Amstel, and later at the other side of the river at Amstelveen. The Van Amstel family, known in documents by this name since 1019,[38] held the stewardship in this northwestern nook of the ecclesiastical district of the bishop of Utrecht. The family later served also under the count of Holland.

A major turning point in the development of the Amstel River mouth was the All Saint's Flood of 1170. In an extremely short time, the shallow river IJ turned into a wide estuary, which from then on offered the Amstel an open connection to the Zuiderzee, IJssel, and waterways further afield. This made the water flow of the Amstel more active, so excess water could be drained better. With drier banks, the downstream Amstel mouth became attractive for permanent habitation. Moreover, the river had grown from an insignificant peat stream into a junction of international waterways.[40] A settlement was built here immediately after the landscape change of 1170. Right from the start of its foundation, it focused on traffic, production, and trade; not on farming, as opposed to how communities had lived further upstream for the past 200 years and northward for thousands of years.[41] The construction of a dam at the mouth of the Amstel, eponymously named Dam, is historically estimated to have occurred between 1264 and 1275. The settlement first appeared in a document from 1275, concerning a road toll granted by the count of Holland Floris V to the residents apud Amestelledamme 'at the dam in the Amstel' or 'at the dam of Amstelland'.[42][14] This allowed the inhabitants of the village to travel freely through the County of Holland, paying no tolls at bridges, locks and dams.[43] This was a move in a years-long struggle for power in the area between the count of Holland and the Amstel family who governed the area on behalf of the bishop of Utrecht.[44] By 1327, the name had developed into Aemsterdam