Augusta County was formed in 1738 from Orange County, although county government was not organized until 1745. It was named for Augusta of Saxe-Gotha, Princess of Wales and mother of the future King George III of the United Kingdom.

Originally, Augusta County was a vast territory with an indefinite western boundary. Most of what is now West Virginia as well as all of Kentucky were formed from it, and it also claimed the territory north and west of those areas, theoretically all the way to the Pacific Ocean.

A series of maps show the formation and division of Augusta County from 1738 through 1791. An animated map shows the formation of Virginia and West Virginia counties from 1617 to 1995.

Reductions in its extent began in 1770, when its southern part became Botetourt County. In 1776 part of western Augusta County, an area also known as the District of West Augusta, became Monongalia County, Ohio County, and Yohogania County (abolished in 1786). In 1778 the part of Augusta County west of the Ohio River became Illinois County (abolished in 1784); the northeastern part of what was left became Rockingham County, and the southwestern part was combined with part of Botetourt County to form Rockbridge County. In 1788 the northern part of the still shrinking county was combined with part of Hardy County to become Pendleton County. Augusta County assumed its present dimensions in 1790, when its western part was combined with parts of Botetourt County and Greenbrier County to form Bath County.

During the Civil War, Augusta served as an important agricultural center as part of the "Breadbasket of the Confederacy." The Virginia Central Railroad ran through the County linking the Shenandoah Valley to the Confederate capital at Richmond. One of the bloodiest engagements ever fought in the Shenandoah Valley, was fought on June 5, 1864 at the Battle of Piedmont, a Union victory that allowed the Union Army to occupy Staunton and destroy many of the facilities that supported the Confederate war effort. Augusta County suffered again during General Philip H. Sheridan's "Burning" that destroyed many farms.