The combination of mountainous terrain and numerous streams has endowed West Virginia with abundant waterpower. Rivers and creeks flowing down relatively steep gradients produce the swift-moving water whose power may be converted into mechanical energy by devices as simple as an old-fashioned mill wheel or as complex as a modern industrial turbine. This energy may be used directly to power mills or mechanical equipment at the site, or converted into electricity for use at remote locations. While only a fraction of available waterpower has been harnessed in a state also blessed with plentiful fossil fuels, nonetheless waterpower has had a critical role in the story of West Virginia. Next to draft animals and human labor, waterpower was the most important and most widely used form of power in our early history.

An enduring and idyllic part of the landscape, gristmills were located on countless streams, and some streams had several. Usually these mills ground corn into meal and livestock feed. The higher-precision flour mills required a larger investment and were located primarily in the bigger towns or county seats. In Preston County alone, there were more than 50 gristmills over the years, with Bruceton Mill on Big Sandy Creek among the largest. It was likely the fifth mill to occupy the site after the first one was built there in 1792. Along the 40-mile run of Patterson Creek in Grant and Mineral counties there were 25 gristmills with just one, Lyons Mill of Williamsport, still operating after 1950.

In addition to the millstones, a gristmill's water wheel commonly powered several devices in the processing and movement of grain. These were typically operated from a common drive shaft by a variety of wooden or metal gears and leather belts. In addition to grinding grain, many gristmills also served as sawmills, using a slow-moving "up-and-down" saw. Other gristmills provided power for carding wool or operating a tannery.

Mill sites were valuable and sought-after locations, often supplying the nucleus for community development. Some mills housed the local store or post office, and many places were named for their mills or millers. For example, Thomas Shepherd built one of the state's first water mills at Shepherdstown. Built by 1739 on Town Run, a Potomac tributary, Shepherd's Mill features one of the largest overshot water wheels ever built. Thomas "Stonewall" Jackson's grandfather constructed a log gristmill in the early 1800s on the east side of the West Fork River in Lewis County, where the Civil War general worked as a boy. The place was soon known as Jackson's Mill and remains so today.

Harpers Ferry, at the confluence of the Potomac and Shenandoah rivers, was chosen as the site of the second U.S. armory because of its great waterpower potential. A munitions plant began production there in 1801 using five water-powered mills. Other 19th-century Harpers Ferry facilities driven by water included a sawmill, a flour mill, a machine shop, two cotton mills, a tannery, and an iron foundry, all of which helped establish the region as an industrial leader.

Waterpower technology was improved over the years at the Harpers Ferry munitions plant, beginning with the motion-regulating tub wheel in the 1830s, the maintenance-saving iron water wheel in the 1840s, and the higher-efficiency Boyden turbine during the 1850s. The use of waterpower continued in Harpers Ferry until the 1930s, supplying two water-powered pulp mills along the Potomac. Waterpower was used at various locations for other industrial purposes as well, including weaving. Water-powered looms were installed at Riverton, Pendleton County, and other places.

After about 1900, waterpower was harnessed for the production of electricity on several West Virginia rivers. These streams eventually included the Ohio, Cheat, Kanawha, Gauley, Potomac, Shenandoah, and New rivers. The state's oldest hydroelectric plant, at Glen Ferris on the Kanawha River, operated for more than a century before being shut down in 2004. The plant was restored and restarted in 2011. Some dams were built specifically for the generation of electricity, including dams at Cheat Lake and at Hawks Nest on New River. In other cases, dams built primarily for navigation or flood control were later fitted for the production of hydroelectricity. A number of such projects were under way at the turn of the 21st century, although hydroelectricity still accounted for only a tiny fraction of electric power produced within the state.