Martinsburg, the county seat of Berkeley County, was laid out in 1773 by Gen. Adam Stephen. The tract of land along Tuscarora Creek had been settled in the 1740s by Joseph Morgan and his brother, John Morgan, from Pennsylvania. Adam Stephen established both gristmills and flaxseed-oil mills along the banks of Tuscarora Creek. Stephen built his house of native limestone on lot 104. The house has been restored by the General Adam Stephen Association.

Berkeley County was established in 1772, and Stephen succeeded in getting Martinsburg declared the county seat over Jacob Hite's proposed Hitetown (now Leetown). Stephen named the town for Colonel Thomas Bryan Martin, a nephew of Lord Fairfax. The county jail, once joining the courthouse, was completed in 1774, but the courthouse was not completed until 1779. Martinsburg was incorporated by the General Assembly of Virginia on October 18, 1778.

The Baltimore & Ohio Railroad came to Martinsburg in 1842, and a roundhouse and machine shops were established. Many of the early railroad workers were Irish, and soon the area east of Tuscarora Creek was called Irish Hill. During the Civil War, the B&O suffered great loss, particularly in Martinsburg, where all of the buildings belonging to the railroad were destroyed. Martinsburg was quick to recover after the war, with a new roundhouse being completed in 1866. The great railroad strike of 1877, the first nationwide industrial strike, originated among B&O workers at Martinsburg. Henry Hannis purchased the old Nadenbousch distillery in 1867 and rebuilt it into a nationally known distillery. A city waterworks was established in 1873, and natural gas was put in many of the downtown buildings by 1873.

A second railroad, the Martinsburg & Potomac, came to Martinsburg from the Williamsport, Maryland, area in 1873. By 1888, this railroad was extended to neighboring Frederick County, Virginia. By the time of the city centennial in 1878, Martinsburg was booming. Several three-story buildings had been built in the main downtown section. The B&O had restored and added to the old 1849 National Hotel, which had become the train station after the Civil War. The new Berkeley Hotel opened in 1876. In 1890, electricity came to Martinsburg.

The Middlesex Knitting Company was established in 1890. The Martinsburg Mining, Manufacturing, and Improvement Company bought several hundred acres on the south side of Martinsburg, laid out lots, and recruited textile firms. Within a few years the Shenandoah Pants Company, the Crawford Woolen Company, the Interwoven Mill, and Southern Merchant Tailoring Company opened plants, making Martinsburg a leading textile city.

By 1940, Martinsburg had four movie houses and was the main business section of Berkeley County. After World War II, change came to the city. Shopping malls developed. Americans ceased to travel by train, and the railroad shifted from steam power to diesel. The interstate highway was built across the county. By 1990, the B&O shop had closed.

In the latter part of the 20th century, much was done to help preserve many of Martinsburg's historical buildings. Seven large historic districts were listed in the National Register of Historic Places. In December 1980, the home of Belle Boyd, the colorful Confederate spy, had become a museum and archive center. A portion of the B&O roundhouse and shop buildings, now a National Historic Landmark, has been restored though a lack of funding has slowed completion of the project. The 1890 Federal building in the Richardsonian Romanesque architecture style is being turned into an art museum. The 1912 Apollo Theater has been restored.

Martinsburg lies on Interstate 81, at the heart of West Virginia's bustling Eastern Panhandle. The city is one of the fastest growing in the state. In 2012, the estimated population was 17,513, a 17 percent increase from 2000.