Mount Gilead lies atop an 602 ft (183 m) peak of Catoctin Mountain to the east of the North Fork Goose Creek.

Mount Gilead began in 1821 when Dr. Isaac Eaton purchased 18 acres (73,000 m2; 7.3 ha) on the western slope of Catoctin Mountain on the road from Leesburg to Coes Mill on the North Fork of Goose Creek for the purpose of founding a health spa from the mountain springs there.

In 1823 Eaton sold three half-acre lots on his property for the establishment of a settlement named Mount Gilead, after the biblical mountain.

In the postbellum years, the village continued to grow and prosper, with a school opening in 1870 and the establishment of several stills at the springs that once fed the spa.

With the coming of Prohibition in 1921, the last of Mount Gilead's industries literally dried up and, by 1930, the county stopped maintaining the road from Mount Gilead to North Fork, thus placing the village at the end of a dead end road.