Montgomery was incorporated as a borough by the Court of Quarter Sessions of the Peace of Lycoming County, Pennsylvania on March 21, 1887, from part of Clinton Township.

The history of the settlement of Montgomery begins in 1783 when John Lawson established a homestead there.

A sawmill and a wool carding mill were other early industries found on Black Hole Creek which flows through Montgomery.

The town was further expanded by the success of Montgomery Machine Shops which started in 1873, under the supervision of Levi Houston, and built woodworking machinery sold to clients throughout the United States, Canada and Australia.

[citation needed] Montgomery was previously known as Black Hole for the creek that flows through it and the post office established in 1836 bearing that name.

In 2007, the Montgomery Lady Raiders won the District IV Championship in Class A Girls Basketball.

In 2007, the Montgomery Red Raiders won the PIAA District IV Championship in Class A Baseball.

In 2010, the Montgomery Lady Raiders softball team took second place in the PIAA State playoffs, losing to champion Chartiers-Houston.

In 2012, the Montgomery Red Raiders baseball team reached the championship game of the PIAA State playoffs.

The Red Raiders lost the championship game to Bishop McCort of Johnstown.