The town was founded in 1837 by two brothers, Daniel and Henry Forrer, who settled in the area to take advantage of the natural resources found in and around Shenandoah. The natural resources included extensive iron ore deposits, hardwood, high-grade limestone, and waterpower. The proximity to the South Fork of the Shenandoah River was also a great benefit and was later used by the Forrers to transport iron ore and other commodities produced by the Shenandoah Iron Works to broader markets down stream.