During the 19th century, the manufacturing of cloth or textiles developed into a lucrative business in some parts of West Virginia. Through the mountain counties, small, family-owned operations began to spring up and replace the household production of textile goods. These small mills usually included fulling and carding machines that made a more durable and attractive yarn than could be spun by hand, and the mills also wove cloth, blankets, linsey-woolsey, and stockings. Carding machines could be found in Wellsburg, Martinsburg, Wheeling, and a dozen other towns.

As early as 1810, Berkeley County had a sizable water-powered textile industry, and it led the state of Virginia in the production of mixed cottons. By the end of the 19th century, companies manufactured calicos in Wheeling, hosiery and woolens in Martinsburg, blankets in Charleston, and upholstery and work clothes in Huntington. J. L. Stifel & Sons operated in Wheeling from 1835 to 1957, producing calico and other cotton goods.

The country's first electric-powered textile factory was in Martinsburg, the county seat of Berkeley County. Established there in 1890-91, the Middlesex Knitting Company, later known as Interwoven, was operated by electricity from the beginning. Martinsburg became West Virginia's leader in textile manufacturing with the establishment of Middlesex, Martinsburg Worsted and Cassimere Company, and Crawford Woolen. The latter two were established by William H. Crawford of New Rochelle, New York. By the close of World War I, Crawford's interests were purchased by investors from nearby Winchester, Virginia. For the next three and a half decades, Berkeley Woolen and Dunn Woolen helped to meet the nation's demand for woolen goods. The two companies, along with Interwoven and Perfection Garment Company (a women's clothing company), were major elements in the Martinsburg economy. About half of the city's workers were employed at one of the textile or garment factories.

Shortly after World War I started in Europe, major changes began to occur in the textile industries. Manufacturers began turning to the use of synthetic and chemically regenerated yarns and fibers. Competition from plants at Nitro and Parkersburg which made rayon by chemically processing raw cotton and wood pulp contributed to the shift. DuPont's Belle works in Kanawha County provided vital intermediate material for the production of nylon, the first true synthetic, providing such material for the entire world production of nylon from 1937 to 1946. This trend to synthetics continued throughout the century.

World War II brought big profits and an increase in jobs to the state's textile companies, but the growth was short-lived. Companies such as Berkeley Woolen experienced serious financial difficulties and closed before the end of the 1940s. Dunn Woolen followed in the early 1950s. Employment declined in the state's textile factories, and changing ownership merely forestalled the inevitable. In 1947, 14,510 people were employed in textile-related jobs in West Virginia, but by 1967 only 7,100 people were.

The 2020 census indicated that the textile industry employed fewer than 30 full-time workers in West Virginia. They worked in mostly small shops scattered over much of the state, making yarn and fabric and products such as curtains, awnings, and industrial tarps, with some embroidering, monogramming, or silk-screening clothing.