Coal mining played an important part in the early history of the Boone area. Local blacksmiths were already mining coal from the banks of Honey Creek south of what became Boone in 1849.
Boone was platted as a town in 1865 by John Insley Blair. It was incorporated the following year, when the Chicago and North Western Transportation Company railroad station was built there. The town was originally named "Montana"; it was renamed to Boone in 1871. The nearby town of Boonesboro was also chartered in 1866; Boonseboro was annexed to Boone in 1887.
Commercial mining was spurred by the arrival of the railroad. In 1867, Canfield and Taylor opened a mine just west of town. Their mine shaft was 242 feet deep, and they hauled coal to the railroad by wagon. In 1874, a railroad spur was built to the mine. This mine was taken over by the railroad, and operated for 30 years. There were coal seams in the Boone area; the upper vein, about 3 feet thick, was always worked using longwall mining, while the lower vein was always mined using room and pillar mining. In 1912, United Mine Workers Local 869 in Boone had 554 members, close to 10% of the population at the time.
The grocery chain Fareway originated in Boone. The company maintains their business offices in town also.
The first Casey's General Store was founded in Boone, Iowa in 1968.