Winchester was created as the seat of justice for Franklin County by act of the Tennessee Legislature on November 22, 1809, and was laid out the following year. The town is named for James Winchester, a soldier in the American Revolution, first Speaker of the Tennessee Legislature, and a Brigadier General in the War of 1812. The Mary Sharp College (originally the Tennessee and Alabama Female Institute) was founded in 1851 by Dr. Z. C. Graves and the Baptist Church. Though a women's college, it offered a classical curriculum based upon what was being offered at the time by Amherst College, Brown University, and the University of Virginia. It closed in 1896.
The city was occupied first by Confederate and then by Union troops during the Civil War. Winchester, along with the rest of Franklin County, seceded from the Union several months before the rest of Tennessee, unofficially becoming a part of Alabama until the rest of the state seceded. It lay on the line of retreat to Chattanooga followed by the Confederate Army of Tennessee during the campaign of 1863.
Recreation in Winchester received a significant boost when the Tennessee Valley Authority started construction of the Tims Ford Dam along the Elk River in 1966. The project was complete in 1972 and Tims Ford Lake is now known for excellent boating and bass fishing opportunities.
The city hosts an annual Dogwood Festival each May.