Cherry Tree is situated mostly in a valley near the headwaters of West Branch of the Susquehanna River where the river is fed by Cush Cushion Creek.
Cherry Tree was originally known as "Canoe Place" because its location marked the spot where the West Branch of the Susquehanna River was no longer navigable and canoes would have to portage. The latter settlement was known as "Newman's Mills" and later "Grant Post Office". The current name was officially adopted in 1907 but had been in use informally by local residents for many years before that time.
Cherry Tree was named for a large cherry tree that stood at the confluence of Cush Cushion Creek and the West Branch of the Susquehanna River. The tree marked the eastern boundary of the territory acquired by the Penn family from the Six Nations of the Iroquois at the Treaty of Fort Stanwix on November 5, 1769. The boundary, called the "purchase line", extended from the cherry tree westward to the current site of Kittanning, Pennsylvania on the Allegheny River. The tree was later used as a boundary marker for Indiana, Clearfield, and Cambria counties.
Cherry Tree was a center of the lumber industry in the later 19th century.