Early history suggests that the Woodsboro area was a hunting and trapping ground for a wandering tribe of Susquehanna Indians. Robert Israel was one of the first white men to settle in the area after venturing into the Maryland interior from the Chesapeake Bay region. Israel Creek still bears the name that was used to identify the whole area and its settlers until after the Revolutionary War. From early times, the settlement was located at a crossroads on the Indian trail running from the Chesapeake Bay to the mountains. When the stagecoach became the primary mode of transportation, the place became an important stop on its itinerary.

The original land grant in the area was made to Joseph Wood, an Englishman born in Gloucester in 1693. When the town was officially laid out in 1786, the name conferred upon it appears to have been Woodsberry (some plats show Woodsberrytown), which later became Woodsborough and then Woodsboro. Although owned by Englishmen, the land was settled and cultivated mostly by German immigrants who arrived through the ports of Annapolis and Philadelphia. German culture predominated in the area prior to the Civil War. Woodsboro appears to have had Northern sympathies during that conflict, but was not directly involved except for a few forays into the area by Southern forces under General Stuart.

After the Civil War, the town developed some notoriety as a train stop that offered exceptional accommodations and relaxing pursuits at the Smith Hotel. Prohibition led to a decline in the hotel’s popularity in some respects, but it was also known to have been the residence of several respectable area school-masters. The hotel is now the home of the Rosebud Perfume Company.

Many Woodsboro citizens participated in World Wars I and II. A memorial to their service was erected on the site of the Old Slagle Inn at the junction of Maryland Routes 550 and 194; the land was donated by the LeGore Lime Company. Later wars also claimed their toll of Woodsboro citizens.

Today, Woodsboro is still primarily an agricultural area, but an important industry is centered on the three lime quarries that border the town. There are small commercial activities and service providers within the town itself.