Coal was known to exist in Western Virginia from colonial times, but not until the early 19th century was it exploited as a commercial fuel. Development came first along the Kanawha River near Charleston and the Ohio River near Wheeling, both areas of early settlement and industry.

The erection of salt furnaces in Kanawha County beginning in 1797 provided the initial stimulus to coal mining. By 1840, 90 furnaces produced a million bushels of salt annually and consumed 200,000 tons of coal. More than 900 salt workers, many of them slaves, mined coal to fire the salt evaporation furnaces. Although the salt industry began to decline after mid-century, the demand for coal continued for other uses, including the production of coal oil for lighting. Steamboats consumed great quantities of coal and also transported coal to the new and growing towns along the Ohio River and its tributaries. By 1860, 25 independent coal companies had been organized which employed more than 1,000 workers.

The Civil War retarded the industry's growth, but the explorations of future promoters, such as the Confederates Jedediah Hotchkiss and John D. and George W. Imboden, during the war and in the years following, laid the groundwork for rapid development as these men turned to peace-time industrial careers. Growth was especially dramatic in southern West Virginia, where the Chesapeake & Ohio Railroad wended its way through the New and Kanawha coalfields and connected Richmond and the new city of Huntington in 1873. The Pocahontas and Flat Top coalfields were linked to the national markets by the Norfolk & Western Railroad in the 1880s, when the line was completed from the port of Norfolk, reaching the Ohio River near Huntington in 1892.

The C&O did not attempt to control the land along its tracks, so the mineral lands in the New and Kanawha valleys were taken up by independent speculators or mining companies during the 1870s and 1880s. Pioneer operators in the New River field, therefore, tended to be independent investors who hired experienced mine managers. On the other hand, the N&W and its land company purchased hundreds of thousands of acres in the Pocahontas and Flat Top fields, which it leased to the actual operators. Pioneer operators in this field tended to be experienced practical coal miners, who had relatively little capital but a willingness to undertake hard physical labor and high levels of risk. Coal operators John Freeman and Jenkin Jones, later wealthy, reportedly arrived in Mercer County with little more than a pick and a shovel.

The northern West Virginia coalfields had their own pioneers. James Otis Watson, sometimes regarded as the father of the West Virginia coal industry, must be considered as leader. Born in 1815 to parents who were among the first settlers in the Fairmont area, Watson learned all he could about mining coal and in 1852 organized the Montana Mining Company. He was the first operator in West Virginia to ship coal by rail, in this case the Baltimore & Ohio Railroad, which linked Baltimore and Wheeling in 1852. Like the N&W and the C&O in southern West Virginia, the B&O sparked a boom in the northern West Virginia coalfields.

Under the direction of Watson's son, Clarence Wayland Watson, one of the major coal corporations in America took form. Clarence, later a U.S. senator, convinced his brothers to join him in founding the Briar Hill Coal Company in 1893. The Watsons soon merged their coal mining interests with those of U.S. Sen. Johnson Newlon Camden Sr. A trusted lieutenant of oil mogul John D. Rockefeller Sr., Camden brought political power and deep financial resources to the new Fairmont Coal Company. Clarence Watson's brother-in-law, Aretas Brooks Fleming, a Fairmont lawyer and governor of West Virginia (1890—93), also joined the company. In 1902, the Watson-Fleming-Camden syndicate, or the "Fairmont Ring" as some unaffectionately called them, acquired the Somerset Coal Company in Pennsylvania, and the following year purchased the B&O's holdings in the Consolidation Coal Company, a Maryland company. With the blessing of Rockefeller in 1909 the entire syndicate reorganized as the Consolidation Coal Company. "Consol" was controlled by Clarence Watson for the next 20 years, and it remains today a major producer of West Virginia coal.

The massive capital investment poured into the West Virginia coal industry produced a social and economic transformation of the region. Railroads carried away coal but also connected the state to the national markets. Finding few of the supporting services required to sustain a workforce in this mountain vastness, investors rebuilt the region to fit their needs. In many locations, the resident farm population was too small to satisfy the demand for labor, so companies recruited workers from outside the region. Along with the coal mines that sprang up along the railroad lines were company towns, built by the operators to provide the necessary services for a rapidly expanding labor force. Economic pressures created by the industrial transition, such as rising property taxes, demand for farm products, and imported manufactured goods, started the older subsistence farming system down the road to extinction.

The explosive growth of production suggests the scale of the coal boom: In 1867, only 490,000 tons of coal were produced in West Virginia, but by 1887 that figure had grown to 4.9 million tons, and by 1917 it had rocketed to 89.4 million tons. The number of mine employees kept pace with production, growing from 3,701 in 1880 to nearly 90,000 in 1917. With the burgeoning population of miners, many of them recruited from outside the state, came an ethnic and racial mixture previously unheard of in West Virginia. In some southern counties, the foreign-born and African-American populations combined to outnumber native-born whites. Social services that previously had been either unavailable or scarce in most rural areas of the state, such as electric power, public schools, public libraries, and a variety of stores, as well as doctors and dentists, became widespread in the coalfields.

The amenities came with a price, however. Prior to the Great Depression of the 1930s, more than 90 percent of the miners in southern West Virginia lived in company-owned towns without benefit of civic institutions. Combined with numerous work-related grievances standard among miners during the pre-union era, labor-capital relations in the coalfields were frequently strained. Generally, the pivotal issue was recognition of the United Mine Workers of America as bargaining agent for the miners. Some of the most famous strike episodes in the history of the American coal industry occurred in West Virginia between 1910 and 1933, including the Paint Creek-Cabin Creek strike of 1912—13; the Mine War of 1920—21, which included the March on Logan, Battle of Blair Mountain, and the Matewan Massacre; and the Monongalia-Fairmont coalfield wars, which occurred between 1927 and 1931.

The economic underpinnings of these conflicts were rooted in the larger economy. In addition to being philosophically opposed to unions, as most industrialists were, coal operators attempted to control labor costs within an environment of notoriously fickle markets. In these disputes, they resorted to every means at their disposal, legal and otherwise, to break the strikes and prevent unionization. Generally, the government sided with the companies. This period came to an end with the Great Depression, as the coal industry buckled in the general collapse of the American economy. Added to economic pressures was passage of the National Labor Relations Act in 1932, particularly Section 7(a) of the act, which granted workers the right to organize unions and provided further impetus for companies to abandon costly and unpopular paternalistic policies. Hence, they sold off the miners' houses and ceased to provide community services, such as education, police, and fire protection, and abandoned the now depressed mine settlements.

During the Depression and World War II, the coal industry laid the groundwork for a new era characterized by the accelerated introduction of labor-saving machinery. Mechanization had begun in the late 19th century with the introduction of the undercutting machine. In the early 1900s, underground coal haulage was improved with the gradual replacement of mules by electric locomotives, and by the 1920s underground work was revolutionized by the mobile loading machine, which organized formerly independent miners into supervised crews.

Miners resisted mechanization, but this was overcome when the union negotiated an agreement with the operators accepting a reduction in the number of workers but ensuring that the increased productivity would result in higher pay and shorter working hours for the miners who remained. By the early 1950s, a machine known as the continuous miner consolidated all of the basic steps in the mining process into one machine operation, radically reducing the labor force required. By the 1970s, mining was revolutionized again by the introduction of computerized longwall mining which sheared coal off sections hundreds of feet long onto conveyor belts. Mechanization underground had its equivalent in surface mining as companies sought to increase productivity and reduce costs. By the end of the 20th century, ever larger earth-moving machines decapitated entire mountains in the controversial practice known as mountaintop removal.

As the capital requirements increased, hundreds of coal companies either disappeared or were consolidated into fewer, much larger corporations. By the end of the 20th century, a handful of major multinational corporations dominated the industry. Production grew under these conditions. In 1997, West Virginia reached a peak coal production of more than 180 million tons. In 2011, West Virginia coal mines produced 133 million tons.

About 25 percent of coal mined is shipped to foreign markets and used mainly in steel manufacturing. Another 15 percent is used by the domestic steel industry. The rest of the coal mined in West Virginia is used to generate electric power.

Absentee ownership continued to be a political issue for most of the century, and the social costs of longwall mining, mountaintop removal, and the moving of coal on overloaded trucks also generated serious political controversy toward the end of the century. However, the decline in the number of workers required by the increasingly automated coal industry had the most direct effect on West Virginia families. In 1950, there were 127,000 coal miners, but by the end of the 20th century that number had plummeted to under 18,000 even though coal production reached record highs. Correspondingly, the high unemployment during this period produced a great out-migration as redundant miners and their families were forced to leave the state to search for employment elsewhere. In 2011, West Virginia’s coal industry employed more than 23,000 people.