Babaevo is situated in the west of the Vologda Oblast, at the intersection of the river Kolp' and the railway route connecting Vologda and St.Petersburg. The name of the town goes back to the time when a runaway peasant known under the name Babai founded a village in 1460. The emergence of the town coincided with the construction of the railway line that linked St. Petersburg and Vologda in 1902.
At the beginning of the 19th century an ironworks sprouted up near the settlement. The output of the plant was rather considerable. As soon as the railway construction began, the employees of the ironworks switched to rail production. But the source of raw materials along the Kolodenka river soon ran out. Cast iron mined from marsh ore was very expensive. The ironworks was no longer able to compete and the plant was closed down.
The first steam locomotive arrived at the station of Babaevo in 1904. In September of 1905 the station of Babaevo became one of the principal railway junctions. Freight and passenger trains going from St.Petersburg to Vologda passed through it.
In June 1925 Babaevo was given the status of a town under the decree of the All-Russian Central Executive Committee and became a district centre of the Leningrad Oblast.
Owing to the changes in the administrative division the town of Babaevo became affiliated with the Vologda Oblast in 1937.
During the Great Patriotic war (1941-1945) Babaevo was a main strong point in the rear in the north-west of Russia.
Now Babaevo is a district centre with a population of 13,300 people. The leading branches of industry are timber, woodworking and chemical. The town has a food industry enterprise, a dairy and a depot.