Jost Hite, a German immigrant, purchased a large land grant in the northern Shenandoah Valley in 1731.
Peter Stephens and a small party of German Protestants from Heidelberg, in the Palatinate, arrived about 1732 to buy and settle that land, including the site of what became Stephens City, named for the Stephens family.
Although Hite's title to the land was challenged by Thomas Fairfax, 6th Lord Fairfax of Cameron, the land baron of the area, the matter was settled amicably.

Town lots were laid out beginning in 1754, and on September 21, 1758, Lewis Stephens petitioned the colonial government of Virginia in Williamsburg for a town charter.
The Virginia General Assembly approved the charter for the town of "Stephensburgh" on October 12, 1758.
The mostly German-speaking residents soon left off the "h"; the town was usually spelled "Stephensburg".
By the start of the Revolutionary War, Stephensburg was often called simply "New Town" or "Newtown", as the new settlement on the Great Wagon Road south of Winchester.

Shenandoah Valley and Newtown's central location attracted heavy traffic through the region, and wagon-making emerged as an important industry for the town; Newtown artisans supplied wagons throughout the state.
By 1830, the town's population had reached 800.
In the late 1850s, free blacks began a settlement about a mile east of town which became known as "Crossroads" or "Freetown", which lasted until the time of the Civil War.
After the January 1, 1863, Emancipation Proclamation, most of the newly freed slaves and many of the already free blacks left the area.

When the Civil War broke out in 1861, the majority of Newtown's young men joined Confederate forces.
During the war, the town was "between the lines", nominally controlled by the Union but with much Confederate partisan activity.
On May 24, 1862, Stonewall Jackson's Confederate forces advanced northward on the Valley Pike and attacked Union troops.
At Newtown, General George Henry Gordon of the Second Massachusetts Infantry ordered his Federal troops to make a stand.
The skirmishing involved heavy artillery fire, but Gordon's men retreated without loss of the important supply wagons.
When Gordon left the town to Jackson's forces, both sides claimed a victory.

In June 1864, Major Joseph K. Stearns of the 1st New York Cavalry arrived under orders to burn the town down to help stop Confederate ambushes on the wagon road.
Because the remaining population mostly consisted of women, children and the elderly, Stearns allowed the town to stand.
He required the adult residents to take the "Ironclad oath", in which they swore that they had not voluntarily provided aid to the Confederacy.
The government required the oath, effectively excluding ex-Confederates from the political arena during the Reconstruction era.

In April 1867, the Virginia General Assembly granted a charter to the Winchester and Strasburg Railroad Company.
The company was authorized to construct a rail line between Winchester and Strasburg, linking Newtown to the rest of the nation by railroad for the first time.
Though the railroad improved the local economy, which had lagged after the end of the war, it decimated the wagon-building trade.
In 1880, the United States Post Office Department, faced with nearly a dozen Newtowns in Virginia, announced that the local post office would be renamed "Pantops".
Dissatisfied with the name, the townsfolk chose "Stephens City".
Jost Hite, a German immigrant, purchased a large land grant in the northern Shenandoah Valley in 1731. Peter Stephens and a small party of German Protestants from Heidelberg, in the Palatinate, arrived about 1732 to buy and settle that land, including the site of what became Stephens City, named for the Stephens family. Although Hite's title to the land was challenged by Thomas Fairfax, 6th Lord Fairfax of Cameron, the land baron of the area, the matter was settled amicably.
Town lots were laid out beginning in 1754, and on September 21, 1758, Lewis Stephens petitioned the colonial government of Virginia in Williamsburg for a town charter. The Virginia General Assembly approved the charter for the town of "Stephensburgh" on October 12, 1758. The mostly German-speaking residents soon left off the "h"; the town was usually spelled "Stephensburg". By the start of the Revolutionary War, Stephensburg was often called simply "New Town" or "Newtown", as the new settlement on the Great Wagon Road south of Winchester.
Shenandoah Valley and Newtown's central location attracted heavy traffic through the region, and wagon-making emerged as an important industry for the town; Newtown artisans supplied wagons throughout the state. By 1830, the town's population had reached 800. In the late 1850s, free blacks began a settlement about a mile east of town which became known as "Crossroads" or "Freetown", which lasted until the time of the Civil War. After the January 1, 1863, Emancipation Proclamation, most of the newly freed slaves and many of the already free blacks left the area.
When the Civil War broke out in 1861, the majority of Newtown's young men joined Confederate forces. During the war, the town was "between the lines", nominally controlled by the Union but with much Confederate partisan activity. On May 24, 1862, Stonewall Jackson's Confederate forces advanced northward on the Valley Pike and attacked Union troops. At Newtown, General George Henry Gordon of the Second Massachusetts Infantry ordered his Federal troops to make a stand. The skirmishing involved heavy artillery fire, but Gordon's men retreated without loss of the important supply wagons. When Gordon left the town to Jackson's forces, both sides claimed a victory.
In June 1864, Major Joseph K. Stearns of the 1st New York Cavalry arrived under orders to burn the town down to help stop Confederate ambushes on the wagon road. Because the remaining population mostly consisted of women, children and the elderly, Stearns allowed the town to stand. He required the adult residents to take the "Ironclad oath", in which they swore that they had not voluntarily provided aid to the Confederacy. The government required the oath, effectively excluding ex-Confederates from the political arena during the Reconstruction era.
In April 1867, the Virginia General Assembly granted a charter to the Winchester and Strasburg Railroad Company. The company was authorized to construct a rail line between Winchester and Strasburg, linking Newtown to the rest of the nation by railroad for the first time. Though the railroad improved the local economy, which had lagged after the end of the war, it decimated the wagon-building trade. In 1880, the United States Post Office Department, faced with nearly a dozen Newtowns in Virginia, announced that the local post office would be renamed "Pantops". Dissatisfied with the name, the townsfolk chose "Stephens City".
Stephens City, Virginia