The area around the intersection of Route 741 and 896 was settled by a small group of French emigrants. French fur trader, Pierre Bezaillion, hunted in the woods surrounding Strasburg and traded with the Delaware Indians. Originating from the Alsace region of France, the French Huguenots also settled here. The cathedral city of the region was named "Strasbourg". Since emigrants had a propensity for naming their new homes after their homes in Europe, the town was named "Strasburg".

Strasburg was initially a trade center and stagecoach stop between Philadelphia and Lancaster. The Old Conestoga Road ran through the town. Taverns were built for overnight accommodations and entertainment. Heavy wagon traffic in the mid-late 1700s drew visitors and rowdy customers to the town. The raucous behavior of some of the visitors and tavern patrons helped gain Strasburg the name "Hell's Hole".

When the Lancaster Turnpike, now Route 30, was completed in 1795, Strasburg lost most of the Conestoga Wagon traffic. However, the Strasburg Road, which travelled from West Chester to York, helped keep stagecoach and wagon traffic coming through Strasburg. In the 1830s, the Philadelphia and Columbia Railroad also bypassed the town. The Strasburg Railroad, chartered in 1832, is the oldest continually chartered public utility in Pennsylvania.

In an attempt to clean up its reputation, several schools were built between 1836 and 1856, as well as academic societies. Massasoit Hall, one of Strasburg's first public buildings, served as a meeting place for residents to discuss the daily news or attend cultural events in its second-story auditorium.

Strasburg was originally made up of log homes, some of which remain today. Poet and educator John Shroy's brick home was built in 1790 and is now the site of the Strasburg Heritage Society.

On the fringe of Amish farmland, many of the roads today are filled with horse-and-buggies instead of stagecoaches and wagons.