One of the biggest changes that came to Sherwood occurred in 1938 when a 300-acre (1.2 km) parcel on the northern edge of the community was purchased by the city of Charlottetown to create an airport. The Charlottetown Airport remains a defining landmark in the north-central part of the city and has had a major influence on Sherwood's post-war development. During the 1960s-1990s, much of the remaining farmland in Sherwood was developed in housing projects which resulted in many single-detached homes constructed throughout the area, making Sherwood one of PEI's top-five communities in terms of population.
Originally the settlement was known as Sherwood Station, as it was located on the mainline of the Prince Edward Island Railway running from Charlottetown to Royalty Junction (where the line bifurcated east to Mount Stewart and west to Emerald. Sherwood Station was incorporated as a village in 1960 and its name was shortened to Sherwood in 1983. The village was amalgamated into the city of Charlottetown on April 1, 1995.
