In the first decades of the 1800s, Grafton was a thriving settlement on the post road from Boston to Albany. The town had many farms, over 10,000 sheep, sawmills, gristmills, tanneries, woolen mills, a soapstone quarry, a carriage and sleigh factory, an inn and several stores. By the mid 1800s many of New England's farmers had moved westward and the region's once strong wool industry had collapsed under the pressures of Australian competition. Like many towns around it, Grafton was no longer on the main thoroughfare.

The Grafton Village Cheese Company was founded in 1892 as the Grafton Cooperative Cheese Company, and converted surplus milk from local dairy farmers into cheese.

Some years later, a fire destroyed the original factory. When the nonprofit Windham Foundation restored the company in the mid 1960s, a new era for the town was born.

Today, quality and taste are still the hallmarks of the company's products. The cheese company is a subsidiary of the Grafton based Windham Foundation, known throughout Vermont for its philanthropy and preservation work in Grafton, Vermont.