George Washington purchased 1,644 acres (6.65 km2) here when land first became available. He visited in 1770 and said, "as fine a land as I have ever seen, a great deal of rich meadow; it is well watered and has a valuable mill seat." The mill would eventually be completed in 1776. Once the mill was finished, it encouraged other business to come to the area to support and augment the business of the mill.
Washington hoped to develop the remainder of Perryopolis, drawing up plans for the streets to be laid out in the shape of a wagon-wheel. Washington's estate sold the land after his death; in 1814 Perryopolis, previously known as New Boston, was officially laid out using Washington's plans and named for Oliver Hazard Perry for his victory on Lake Erie during the War of 1812.
In the late 19th Century, the area around Perryopolis was first mined for coal. Until the 1950s, coal industries would be the area's primary economic activitiy, served by the Washington Run branch of the P&LE Railroad that continued on to Star Junction, Pennsylvania. However, Perryopolis developed differently than other nearby mining towns. Instead of housing laborers, Perryopolis was mainly inhabited by foreman and white collar workers who were associated with the mining industry.