Welch was incorporated in 1893 and named after Isaiah A. Welch, a former captain in the Confederate Army who came to the region as a surveyor, and helped establish the plan for the beginning of a new town at the confluence of the Tug and Elkhorn rivers.
Welch was made the county seat of McDowell County in an election by county citizens in 1892  even before Welch was incorporated as a city. The previous county seat was in Perryville (now English) near present day Coalwood. Results of the election were contested so to avoid violence county records were secretly moved from Perryville to Welch at night in two wagons by James A. Strother and Trigg Tabor.
On March 2, 1921, the Welch City Council met to discuss impeachment of then Mayor J. H. Whitt. Whitt showed up at the meeting and disrupted the proceedings. The Welch City Council then asked the McDowell Co. Sheriff's Dept. to investigate Whitt. Later that same day, Mayor Whitt shot and killed McDowell County Deputy Sheriff William Johnson Tabor who was investigating the matter. Mayor Whitt was arrested and charged with murder but won acquittal at his trial (allegedly based on perjured testimony). Whitt left the area for parts unknown on September 27, 1921.
In the first half of the 20th century during the opening of railroads and coal mines throughout the region, Welch became a prosperous city: the hub of retail business for a county approaching 100,000 in population, and the location for three hospitals. After the production boom of World War II, oil began to supplant coal in many areas of domestic fuel supply. Mechanization of coal mining reduced the number of laborers needed in coal production. McDowell County's population peaked in 1950, and began a decline over decades to follow. In 1960, however, McDowell County still ranked number one in the United States in total coal production. The City of Welch proudly proclaimed itself "The Heart of the Nation's Coal Bin."
When presidential candidate John F. Kennedy visited Welch by automobile caravan in 1960, he saw a city whose businesses were struggling due to a growing poverty rate throughout the county. What Kennedy learned here during his campaign for the 1960 West Virginia primary was believed to be the basis of the aid brought to the Appalachian region by the Kennedy and Lyndon Johnson administrations. During a speech in Canton, Ohio on September 27, 1960, he stated "McDowell County mines more coal than it ever has in its history, probably more coal than any county in the United States and yet there are more people getting surplus food packages in McDowell County than any county in the United States. The reason is that machines are doing the jobs of men, and we have not been able to find jobs for those men."
The first recipients of modern era food stamps were the Chloe and Alderson Muncy family of Paynesville, McDowell County. Their household included fifteen persons. On May 29, 1961, in the City of Welch, as a crowd of reporters witnessed the proceedings, Secretary of Agriculture Orville Freeman delivered $95 of federal food stamps to Mr. and Mrs. Muncy. This was the first issuance of federal food stamps under the Kennedy Administration, and it was the beginning of a rapidly expanding program of federal assistance that would be legislated in the "War on Poverty."
In the 1960s and 1970s, McDowell County coal continued to be a major source of fuel for the steel and electric power generation industries. As United States steel production declined, however, McDowell County suffered further losses. In 1986, the closure of the US Steel mines in nearby Gary, led to an immediate loss of more than 1,200 jobs. In the following year alone, personal income in McDowell County decreased dramatically by two-thirds. Real estate values also plummeted. Miners were forced to abandon their homes in search for new beginnings in other regions of the country.
In recent years, Welch has attracted the construction of new state and federal prisons which are creating some sources of economic renewal. The city has begun restoration of its historic downtown area.
Welch has been the celebrated location of an annual Veteran's Day Parade which over the decades has attracted a distinguished list of speakers, including Harry Truman and Lyndon Johnson.