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According to the United States Census Bureau, the village has a total area of 2.2 square miles (5.6 km 2), of which, 2.1 square miles (5.4 km 2) of it is land and 0.1 square miles (0.2 km 2) of it (3.24%) is water. The Seneca River/Cayuga-Seneca Canal pass through the village, linking the area to the Erie Canal system.
The average household size was 2.71 and the average family size was 3.05. In the town, the population was spread out, with 28.1% under the age of 18, 10.8% from 18 to 24, 27.1% from 25 to 44, 21.7% from 45 to 64, and 12.3% who were 65 years of age or older.
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Waterloo was originally known as Prairie Rapids Crossing. [4] The town was established near two Meskwaki American tribal seasonal camps alongside the Cedar River. It was first settled in 1845 when George and Mary Melrose Hanna and their children arrived on the east bank of the Red Cedar River (now just called the Cedar River).