The village was founded in 1773 as the seat of the newly created Westmoreland County, and was known at the time as "Hanna's Town". It was located along Forbes Road, the main route into the Ohio Country from eastern Pennsylvania, and named for Robert Hanna, an early settler whose tavern also served as Westmoreland County's first courthouse. Hannastown was settled primarily by Irish and Scotch-Irish, though the surrounding area was mostly Pennsylvania Dutch.
On July 13, 1782, in one of the final actions of the American Revolutionary War, the settlement was destroyed by a force of The King's 8th Regiment out of Fort Niagara "The King's, or 8th Regiment - Detroit Garrison" and British-allied American Indians led by Guyasuta. The county government was moved to Newtown, which later became known as Greensburg. The village was rebuilt, but after Forbes Road was rerouted through Greensburg, the settlement grew little, and eventually most of it became farmland.
In recent decades, Hanna's Town has been excavated and extensively restored and rebuilt. Currently, the Historic Hanna's Town site includes the reconstructed Hanna Tavern/Courthouse, three vintage late 18th century log houses, a reconstruction of the Revolutionary-era fort and blockhouse, and a wagon shed housing an authentic late 18th century Conestoga wagon. The site is maintained and opened to the public by the Westmoreland County Historical Society and the Westmoreland County Parks and Recreation Department.