Olive Hill began as a rural trading post established by the Henderson brothers in the first part of the 19th century. Although Olive Hill was allegedly named by Elias P. Davis for his friend Thomas Oliver, there is no evidence to support this popular contention. In 1881, the town was moved from a hillside location to the current location in the Tygarts Creek valley, where the Elizabethtown, Lexington, and Big Sandy Railroad had laid tracks. The hillside location become known as Old Olive Hill and now serves as the city's residential area. On March 24, 1884, Olive Hill incorporated as a city and served as the county seat of the short-lived Beckham County from February 9 to April 29, 1904. The Chesapeake and Ohio Railway served Olive Hill and many other places on the railroad's Lexington Subdivision. The C&O merged into the Chessie System, which CSX Transportation later bought out, and after that CSX pulled up the railroad in the mid 1980s. Olive Hill retained and restored a passenger depot as well as a caboose. Olive Hill's racial history is not one that makes for pleasant reading. According to George C. Wright in his A History of Blacks in Kentucky, volume 2, "In the small community of Olive Hill in 1917, several hundred white laborers at the brick-making General Refractories Company threatened to strike unless recently employed blacks were dismissed. After first refusing to meet with the leaders of the disgruntled workers, the company managers acceded to their demand and fired all the black workers,". Perhaps this is one of the reasons the 2010 census shows only.17% percentage of African Americans residing in the city.
As of the census of 2000, there were 1,813 people, 791 households, and 488 families residing in the city. The population density was 904.1 people per square mile. There were 886 housing units at an average density of 441.8 per square mile. The racial makeup of the city was 98.73% White, 0.17% African American, 0.50% Native American, 0.11% from other races, and 0.50% from two or more races. Hispanic or Latino of any race were 0.61% of the population. There were 791 households out of which 26.5% had children under the age of 18 living with them, 44.5% were married couples living together, 14.5% had a female householder with no husband present, and 38.2% were non-families. 34.8% of all households were made up of individuals and 18.6% had someone living alone who was 65 years of age or older. The average household size was 2.28 and the average family size was 2.93. In the city, the population was spread out with 24.5% under the age of 18, 8.3% from 18 to 24, 24.4% from 25 to 44, 24.4% from 45 to 64, and 18.4% who were 65 years of age or older. The median age was 39 years. For every 100 females, there were 83.7 males. For every 100 females age 18 and over, there were 78.0 males. The median income for a household in the city was $22,958, and the median income for a family was $31,071. Males had a median income of $24,063 versus $19,191 for females. The per capita income for the city was $12,628. About 16.7% of families and 24.8% of the population were below the poverty line, including 35.1% of those under age 18 and 23.5% of those age 65 or over.
Olive Hill is the birthplace of country music singer and writer Tom T. Hall, a fact that is noted on the "Welcome to Olive Hill" signs on the edges of town.
