The tract where Berryville now sits, where the Winchester Turnpike crossed the Charlestown Road, was first granted by the Crown to Capt. Isaac Pennington in 1734. George Washington surveyed it for him on October 23, 1750, and in 1754 he sold it to Col. John Hite.
It is said that as a youth, Revolutionary hero, Daniel Morgan had frequented this intersection, where young "toughs" would congregate solely for the pleasure of engaging in combat. To protect himself, he would place large stones nearby ahead of time to use as ammunition in case he had to retreat. Owing to this and the rowdy tavern nearby, the area received its first, informal name: "Battle Town".
Hite sold the tract in 1765 to his son-in-law, Major Charles Smith. Smith also named his estate "Battle Town", and on the site of the former tavern he built a clapboard homestead, which still stands on Main Street and is now known as "the Nook".
Daniel Morgan returned to the area after distinguishing himself in the Revolution, living at Saratoga, and briefly at Soldier's Rest. He was one of the frequent (and reputedly most quarrelsome) patrons of the new tavern, where the Battletown Inn now stands.
Major Smith's son, John Smith, in 1797 sold 20 acres of his inheritance to Benjamin Berry and Sarah (Berry) Stribling, who divided it into lots for a town. It was established as the town of Berryville on January 15, 1798.
By 1810, the town had at least 25 homes, three stores, an apothecary (pharmacy), two taverns, and an academy (school). It was not much larger when it became the county seat of newly-formed Clarke County in 1836.
Confederate Gen. Jubal A. Early briefly had his headquarters in the town, and not long afterward the Battle of Berryville was fought in and around the town during the Valley Campaigns of 1864, during the American Civil War.