Remains of an Iron Age Hill Fort at the top of Caerlee show that habitation has existed in the area around Innerleithen since pre-Roman times and there are remains of an Iron-Age hill fort at the top of Caerlee Hill in the west side and Windy Knowe hill on the east. Also crop marks from aerial photographs of the 1950s suggest the existence of a semi-permanent Roman marching camp on the flood plain by the river Tweed at Toll Wood (near Traquair) and at nearby Eshiels.
Popular folklore suggests the town may have been founded by a pilgrim monk called St. Ronan in A.D.737, who came to Innerleithen via the River Tweed. A carved Celtic stone of considerable antiquity (known as the Runic Cross) was found on the slopes of the Leithen valley suggesting Christian worship existed during the middle ages and this can now be viewed in the courtyard of the parish church on Leithen Road.
According to the local legend "St. Ronan Cleik't the Deil by the hind leg and banished him", which may be a metaphor for the monks bringing Christian learning back into these regions.
The great 19th Century novelist Sir Walter Scott's novel 'St Ronan's Well' (1824) was widely recognised to have been set in and around Innerleithen and Scott helped formalise the legend of St. Ronan forever linking the town with its Patron Saint. In 1827 James Hogg Hogg, the Ettrick Shepherd, instituted St. Ronan's Border Games which are still held and recognised as the oldest organised sports meeting in Scotland.
In 1901 "The Cleikum Ceremonies" were linked to the Games as a way to stop the legends and folktales of the region from dying out and to familiarise the youth of the town with the legend of St. Ronan.
St. Ronan's Border Games Week is now a ten day festival (held each July) and each event draws enthusiastic crowds with local and tourist participation.
Innerleithen can trace roots from the 12th century, when it was recorded as "Inverlethane" and it is said that a son of King Malcolm IV of Scotland (who was staying at Traquair House on a hunting trip), drowned accidentally in a deep pool where the rivers Leithen and Tweed meet and his body was recovered by locals and taken to the church. The King bestowed the right of sanctuary to the land in recognition and the pool where the drowning is alleged to have taken place is still known locally as "The Droont Pool". However Malcolm IV is reported to have died childless at the age of twenty five, so the veracity of this claim is questionable. (Note: He was known as Malcolm the Maiden as he was unmarried, but thought to have illegitimate children)
Later written accounts of the town date from the 15th century when it is referred to as "Henderleithen", and at this point it is recorded as a hamlet within the Parish of Traquair, which with its major baronial house, was centre of the Parish.
During the industrial revolution, wool milling saw Innerleithen outgrow its neighbour Traquair to become the larger village with its population rising from 1130 (1861 census) to it current level of over 2500. Once it had five significant wool mills (or hosieries) and established an enviable reputation for producing high quality fashion knitwear and cashmere for international markets. The largest mill (Ballantyne’s) closed in January 2010, however new owners continue trading as Caerlee Mills Ltd with a reduced workforce and the mill shop is still open to visitors.
Music and the Arts are well represented with a pipe band, brass band (which celebrates its bicentenary in 2010) and an amateur opera society which performs twice a year to sell-out crowds.
Today, new industries, primarily within the tourism and forestry sectors, have grown steadily and now Innerleithen is the hot favourite for its challenging mountain biking and is host to several major events throughout the year with riders coming from all over the world.