With the beginning of the Civil War, both the North and South saw the mountains of Western Virginia as a strategically vital area. The region was seen as the source of thousands of tough recruits and of essential raw materials, an important staging area for attacks into the heartland of their opponents, and it was traversed by the Baltimore & Ohio Railroad, one of only two east-west railroads in the country at that time.

When Confederate troops threatened the B&O at Grafton, the federal government quickly moved troops into the area. Just before dawn on June 3, 1861, the first land battle of the Civil War involving organized troops took place at Philippi, about 15 miles south of Grafton. Some 3,000 federal troops under the general command of Maj. Gen. George B. McClellan and the immediate command of Col. Benjamin F. Kelley and Col. Ebenezer Dumont drove about 800 Confederates under Col. George A. Porterfield from the town. The outnumbered Rebels retreated so briskly that the battle was sometimes humorously referred to as the "Philippi Races." While no one was killed in the brief encounter, Kelley was severely wounded and two Confederates suffered leg wounds, necessitating the first amputations of the Civil War. One of the amputees was Virginia cavalryman James Hanger. He later founded Hanger Prosthetics, still a major manufacturer of artificial limbs.

According to historian Mark Snell, “Philippi was a trifling tactical affair, but it had significant strategic consequences, the most important of which was to deprive the Confederacy of the Baltimore and Ohio Railroad.” Snell further notes that the B&O “became the most important east-west transportation artery in the Union.”

Politically, the Northern victory stiffened Unionist resolve in Western Virginia. Within three weeks, the first Wheeling Convention voted to nullify the Virginia ordinance of secession, declared the offices of the state government at Richmond vacated, and named Francis H. Pierpont governor of the "restored" government of Virginia. The victory also played an important part in General McClellan's meteoric rise to the command of the Army of the Potomac.

The federal strategy at Philippi included what was probably the first employment of the railroad to effect the convergence of divergent forces upon an enemy in world history.