Herndon was named for Commander William Lewis Herndon, American naval explorer and author of Exploration of the Valley of the Amazon. Commander Herndon captained the ill-fated steamer SS Central America, going down with his ship while helping to save over 150 of its passengers and crew. The settlement was named Herndon in 1858. In the 1870s, many Northern soldiers and their families came to settle in the area, taking advantage of moderate climate and low land prices.
Originally part of the rural surroundings of the Washington, D.C. area, the town of Herndon developed into a hub of dairy farming and vacationing for area residents, aided by its presence along the Alexandria, Loudoun and Hampshire Railroad (later to become the Washington and Old Dominion (W&OD) Railroad). When the railroad was converted into a hike-and-bike trail, Herndon capitalized on history and small-town feel (in a major metropolitan region) by converting its train station into a museum and visitors center and by relocating a Norfolk Southern Railway caboose to a nearby site and repainting it in W&OD livery.
The caboose was originally acquired in 1989 by Herndon Historical Society member, George Moore, to whose memory the caboose was dedicated after his death in 2003. Although the caboose itself never traveled through Herndon, it remains an iconic part of the downtown area that both locals and tourists visit daily. The caboose and station offer a glimpse of the original downtown's historic charm, which residents are passionate about preserving.
On January 14, 2004, the Town of Herndon commemorated its 125th anniversary.
The town of Herndon was part of a nationally reported controversy involving illegal immigration beginning in 2005. The controversy revolved around a day labor center called the Herndon Official Worker Center (HOW Center), operated by Reston Interfaith's Project Hope and Harmony under a grant from surrounding Fairfax County. The HOW Center was created on March 23, 2006 in response to daily gatherings of Hispanic workers at a local 7-Eleven store.
The 2006 election for Mayor and Town Council revolved mainly around the issue, and resulted in unseating the pro-center Mayor and two councilmembers. The center closed after less than two years of operation, in September 2007.
The Herndon Historic District is listed on the National Register of Historic Places.