Stonehouse appears in William the Conqueror's Domesday Book of 1086[2] under its Old English name “Stanhus” – so called, it is believed, because the manor house was built of stone rather than the usual wattle and daub.

[4] The name may have evolved from Stanhus to Stonehouse : stān > stone + hūs > house, as an effect of the Great Vowel Shift at the end of the Middle Ages.

In 1906, Stonehouse Court was bought by Arthur Winterbotham who completely refurbished it to a design by architect Edwin Lutyens.

The central block has been more drastically altered, but also formed part of the original timber-framed house; the presence of several re-used smoke-blackened timbers in the roof suggests that it may have contained a medieval open hall before it was remodelled.

[9] In 1327, one of the manor's masters, John Maltravers, was implicated in the murder of Edward II in Berkeley Castle, and fled abroad.

He later found favour with Edward III and the Stonehouse manor was restored to him “by tenure de Marchacia (of the royal Marshalcy) by a rose per annum”.

The small mills of the 17th and 18th century supported work at home for the growing population of the village, later changing to a factory system.

As the textile industry declined, Stonehouse remained a thriving place as smaller businesses of every type took over.

The largest and last to close of the brickmakers, Stonehouse Brick and Tile Company Ltd., was located where the Rosedale housing estate[13] now stands.

Stonehouse has a number of business and industrial parks, with the largest of these in Oldends Lane, located off the A419 in the west of the town and is home to the Severnside Dairy[17][18] for Müller and other large companies including Schlumberger, Renishaw, Delphi Automotive, Lister Shearing and Dairy Partners.

In 2015 a new business park was built at the side of the A419 opposite the town's main industrial estate in Oldends Lane.

In 2016 a new eco-business park and wood-based football stadium for Forest Green Rovers was mooted by local businessman Dale Vince, CEO of Ecotricity, to be constructed west of the town, close to the M5 junction.

The formal planning application for the stadium was initially refused by Stroud Council in June 2019 but ultimately approved in December 2019.

Work is currently underway and plans to also relink it all the way to Saul Junction where it will meet the Gloucester & Sharpness Canal.

The Ocean is an ideal wildlife nesting location and a variety of ducks, swans, herons, kingfishers and moorhens can be seen.

On the town side of the A419 next to Court View, near the now derelict Stonehouse and Nailsworth Railway is a small nature reserve, fenced off from public access, that contained a colony of great crested newts.

Over the years since the estate at Court View has been occupied, the five valleys project were responsible for the reserve and took an annual census of the number of newts.

The Spa Inn on Oldends Lane was one of Stonehouse's oldest public houses, developing from 16th-century cottages.

The A419, in the west of the town, is the main artery route connecting both Stonehouse and the Stroud area to the nearby A38 and M5.

The B4008, High Street, is the main road through the town and also serves as a busy commuter route between Stroud and Gloucester, via Quedgeley.

The town is served by Stonehouse railway station on the Golden Valley Line, with a service to London.

When the threat of war became clear in the late 1930s, the Cotswolds were seen as a suitable location for the dispersement of aerospace shadow factories, being a safe place away from German bombers range.

Smiths were co-located to Bishops Cleeve and Stonehouse was chosen as a good place to build factories for the manufacturers Sperry's Gyroscope Company, who moved to Bond's Mill and Hoffmann's Bearings located to Oldends Lane.

The Gatehouse at Bonds Mill was originally constructed during World War II as a defensive pillbox.

It is a rare example of a two-storey pillbox with a rooftop gun emplacement and is a Grade II listed building.

There are the remains of a more conventional pillbox located on the railway at the canal crossing (2021) which may not survive the new bridge scheduled for Christmas 2021.

Detailed mapping of the Sperry factory was noted by German Intelligence, in preparation for a raid in February 1943, although this never occurred.

[33] Rationalisation of the railways happened quickly after the Second World War, with passenger services being suspended on the Stroud and Nailsworth branch in 1947, and to freight in 1966, though special excursion trains for mill workers were provided for day outings (up to 1965).

Housing development in Stonehouse continued during the post-war period, with the Park Estate being built in the 1950s, Little Australia, Boakes Drive and continuing into the 21st century, with the small developments at Arrowsmith Drive and Court View, which is located opposite Stonehouse Court and built partially on the old Stroud and Nailsworth branch line in 2002.

In 2018, a small hamlet of 8 houses was built on the site of Stonehouse Youth Centre in Elm Road.