[3] Present-day Atglen was originally a wilderness where Native Americans made paths that cut across this area when they traveled from Paxtang in present-day Harrisburg to present day New Castle, Delaware to trade with the Swedes and later the English.

It covered a large territory, including in whole or in part the present-day townships of Sadsbury, West Sadsbury, West Caln, Valley, East Fallowfield, West Fallowfield, and Highland; the boroughs of Atglen, Parkesburg, Modena, and South Coatesville; the city of Coatesville; and parts of Lancaster County.

[4][5] In August 1728, several inhabitants petitioned the court to separate Sadsbury from Fallowfield because of the former's size.

Newport Road, leading to the ore mines at Cornwall in Lebanon County, was laid out in 1796.

Andrew Moore (1688–1753), who had been influential with Samuel Miller in founding Sadsbury Meeting House, built a tub mill on his property.

The original settlement in the town's current location was known as Penningtonville, and a post office by that name was established there in 1842.

In 1876, the court in West Chester made an official decree incorporating the village of Penningtonville as the "Borough of Atglen.

[7] According to the U.S. Census Bureau, the borough has a total area of 0.9 square miles (2.3 km2), all land.

Pennsylvania Route 41 follows Gap Newport Pike on a northwest-to-southeast alignment across the northeastern portion of the borough.