Industrialist Abijah Thomas bought a 344-acre tract in this area, including a sawmill and a grist mill, in 1844. Here about 1860 he and a partner opened Holston Woolen Factory, a major producer of textiles around which the village of Holston Mills developed. During the Civil War, Company A of the 23rd Battalion Virginia Infantry was organized here, and the woolen mill made cloth for Confederate uniforms. Dormant following the war, the mill flourished under new ownership after 1875, when it became known as Holstein Woolen Mills. The town expanded to include a school, shops, a post office, and a telegraph office. After the mill moved to Salem early in the 1890s, the village declined and later vanished.