In the 1765 Black Boys Rebellion, Fort Loudoun was assaulted by angry settlers, when their guns were confiscated after they destroyed supplies intended for Native Americans.

[3] In late 1755, Colonel John Armstrong wrote to Governor Robert Hunter Morris: "I am of the opinion that no other means of defense than a chain of blockhouses along or near the south side of the Kittatinny Mountains from the Susquehanna to the temporary line, can secure the lives and property of the inhabitants of this country, the new settlements being all fled except Shearman's Valley.

[7] Fort Loudoun was intended to replace a simple privately-built stockade at McDowell's Mill, which was too small to adequately defend the area.

The new governor, William Denny, consulted Lieutenant Elias Meyer, a British army engineer, who helped determine a good location for the fort.

[4] Construction followed a standard design adopted by Governor Robert Hunter Morris, typically a 100-foot square stockade with bastions at the four corners, and several buildings inside, including a barracks, an officers' quarters, a gunpowder magazine, a kitchen and a storehouse.

[8]: 478  In 1759, Matthew Patton, the owner of the land on which the fort was built, returned and filed a petition with the provincial government for damages to his property.

[8]: 475 In March 1765 a pack train of goods owned by George Croghan was intercepted by Pennsylvania settlers, who were concerned that "warlike goods" including weapons and rum were being sent to Native Americans in exchange for land and other favors, in defiance of the Royal Proclamation of 1763 which forbade the sale of "war-like" trade items (guns, knives, tomahawks, gunpowder, lead, rum, whiskey) to Native Americans.

Croghan was interested in obtaining rights to land in the Ohio Country, and hoped to use the trade goods to win favor from Shawnee and Lenape chiefs before large numbers of settlers began moving west.

Magistrate William McDowell attempted to halt the pack train for inspection, but the drivers refused and continued on towards Fort Pitt.

[12] The next day, a group of ten armed citizens led by James Smith intercepted the pack train during a snow storm and requested that the goods be stored at Fort Loudoun until it could be determined if they were in fact illegal.

At the fort, Lieutenant Charles Grant sent Sergeant Leonard McGlashen and a platoon of men to search for the "highwaymen" they thought had attacked the pack train.

James Smith gathered over a hundred men and besieged the fort, demanding the return of their nine guns and the delivery of Lieutenant Grant and Sergeant McGlashan as prisoners.

[14]: 422 [6]: 11 A historical marker with a brass plaque was placed 20 October, 1915 near the fort's site on Old Lincoln Highway (U.S. Route 30 in Pennsylvania).

In 1980, 1981 and 1982 digs uncovered the entire palisade trench, a stone-lined well, postholes and mold remains of structures, a trash midden, root cellars, and drains.