The name originates from the fact that the forest contains the headwaters of East Fork of the French Broad River.

[2] The forest was established in 2009 when Congressman Charles H. Taylor agreed to sell about 8,000 acres (32 km2) to the state, which was one of the largest remaining tracts of privately held land in Western North Carolina.

[3][4][5] A small, 4.8-acre (0.019 km2)[6] portion of the property around the summit of Sassafras Mountain was given to the South Carolina Department of Natural Resources for development of an observation tower at South Carolina's highest point.

[6] On September 8, 2018,[4][5] the beginning of deer season,[5] Headwaters State Forest was opened to the public.

[2] A spur of the Foothills Trail follows along the southern boundary of the forest, connecting Sassafras Mountain to Caesars Head State Park (SC).