Originally known as Prospect Bluff, the town was founded in 1840 by Erastus Gregory. In 1871 a Baptist school, Judson University, was established in the area. A few months later the name Prospect Bluff was changed to Judsonia, after Baptist missionary Adoniram Judson, to help promote the school, which drew many northerners to the area.
Though the school died in 1883, the town streets still bear the names of several well-known 19th-century Baptists: Judson and Hasseltine (after Adoniram Judson and his wife, Ann Hasseltine Judson), Wayland (after Francis Wayland, president of Brown University in Rhode Island), Wade (after missionary Jonathan Wade) and Boardman (after missionary George Boardman, whose widow, Sarah Hall Boardman became Judson's second wife).
On the evening of March 21, 1952, tornadoes swept Arkansas leaving 111 dead. Fifty of those fatalities were in Judsonia and the near vicinity. It was reported that the only building in the town not damaged was the Methodist church, which stands today in the city's downtown area along Van Buren Street.
"That's Judsonia" by William Ewing Orr (1957, White County Printing Company) is the most complete history of the community.
Judsonia is home to a yearly festival called Prospect Bluff Days in honor of the towns origins.