In the 1600s the area around Stanley was part of the estate of Earls of Atholl and was also the location of Inchbervis Castle.

John Murray, the 4th Duke of Atholl, decided in the 18th century to harness of the nearby River Tay to power a cotton mill.

Stanley was largely founded to house workers for a huge mill on the banks of the River Tay.

The Dempster & Co company was established in 1787 by seven men including Richard Arkwright, George Dempster and William Sandeman to build the mill on land feued from the Duke of Atholl to provide employment to Highlanders affected by the clearances.

[2] A fire in 1799 destroyed a large section of the mill and it reopened in 1802, partly with advice from David Dale of New Lanark (which it closely resembles).

The mill used coal gas for lighting until 1921, when this was replaced by a hydroelectric power plant, which was built to also supply electricity to the village.

A bus service, started in the 1930s, of Stanley-based Allan & Scott, used to run the five miles between Stanley and Bankfoot twice a day on Sundays.