On the south branch of the Potomac River, Petersburg was settled in 1745. It was named after a German colonist, Jacob Peterson, who established the town's first store. During the Civil War, the town served as a Union outpost along the contested border between the North and South. Nearby earthworks were constructed by troops from Illinois and Ohio in 1863.

Because it is near the entrance to Monogahela National Forest and Spruce Knob Lake Campground-Seneca Rocks National Recreation Area, Petersburg is considered a recreation center, and calls itself the `Home of the Golden Trout.` Area outfitters provide information, equipment and guides.