The Passamaquoddy originally subsisted primarily by hunting moose and caribou, supplemented by fishing and gathering wild plants, roots, and seeds. They moved to the coast in the summer and inland in the winter to their hunting grounds. Their villages consisted of cone-shaped wooden dwellings and a large council house, protected by a defensive palisade. Politically, most decisions were handled by family representatives at council meetings, although decisions about going to war involved the entire tribe. They also had a war chief and a civil chief. Little of their traditional culture remains although some still speak the native language.

The Passamaquoddy had already been greatly reduced in number by European diseases when they first met and aided the French explorers Siur de Monts and Samuel de Champlain. Passamaquoddy fought alongside the colonists during the American Revolution, but after the war were displaced by Loyalist settlers fleeing the USA. A series of treaties with Maine and Massachusetts beginning in 1794 reduced their territory to just 7,200 ha/18,000 acres, an area that was recognized as a state reservation when the State of Maine was incorporated in 1820. They now live on 7,200 ha/18,000 acres of reservation lands at Pleasant Point and Indian Township on Passamaquoddy Bay.

In 1972 the Passamaquoddy and Penobscot filed a suit for federal government aid to sue the State of Maine for 5 million ha/12.5 million acres taken from them illegally during settlement; an area amounting to two-thirds of the state. They claimed that the Nonintercourse Act of 1790, which prohibited the transfer of land from Indians to non-Indians unless approved by Congress, had been violated between 1794 and 1833. The US government's legal duty to take action against the State of Maine on behalf of the Passamaquoddy and Penobscot was accepted in a landmark decision in 1975, and an out-of-court settlement of $81.5 million was announced in 1978. The settlement, shared between the Passamaquoddy, Penobscot, and the Houlton Band of Maliseets (later claimants in the suit), was confirmed in the Maine Indian Claims Settlement Agreement of 1980, when the original transfer of lands was finally approved by Congress. The Passamaquoddy received $26.8 million for land acquisition and $13.5 million as a settlement fund to be held in trust by the US government. The 1980 agreement also reconfirmed their federal recognition, first granted in the 1970s, but set limits of their self-government.

The Passamaquoddy of New Brunswick, Canada, do not have formal recognition from the Canadian government, and are campaigning for the return of lands, lost when the border between the USA and Canada was established through the middle of Passamaquoddy ancestral lands in 1842. They also assert that hunting, trapping, fishing and gathering rights were guaranteed to the Passamaquoddy under treaties with Britain 1760-61.