Colchester is a city in McDonough County, Illinois, United States. The population was 1,108 at the 2020 census, down from 1,401 in 2010. …Colchester is a city in McDonough County, Illinois, United States. The population was 1,108 at the 2020 census, down from 1,401 in 2010. The city is named after the city of Colchester, England. Coal was discovered near Colchester in the 1850s.