The village of Bishop Middleham lies in a valley about 9 miles south-west of Durham. Although much of County Durham had probably first been settled in the Mesolithic period, the first evidence for occupation in the parish dates to the Neolithic or Bronze Age. At least two simple flint tools, including an arrowhead, have been found in the area. The arrowhead was probably used by an early hunter, though by the Bronze Age farming would have been widespread. By the Iron Age we have our first evidence for burials in the parish - at least six graves were found in a small cave. A small glass bead decorated with white spiral patterns may also have come from an early of middle Iron Age grave, though it may have been lost in another way.

It is clear that Bishop Middleham was on an important Roman period routeway; Cades Road runs through the centre of the parish. Despite the presence of this important communication route, no Roman buildings have been found in the parish. Nonetheless several other Roman objects have been uncovered in the area, including a small bronze statue of a Roman god. More unusually a group of four Roman pans stacked one inside each other have been found. They were decorated to give them a silver appearance. It is possible they may have had a religious use, as such pans are often shown carved on the site of Roman altars. The discovery of these objects and the small statue may suggest that an, as yet undiscovered, Roman temple is still to be found in Bishop Middleham.

There is little hard evidence for Anglo-Saxon settlement in the parish, though as Middleham is an Old English name for 'middle settlement or farm' there was certainly some kind of occupation in the area by the 9th or 10th centuries.

In 1146 Osbert, the nephew of Bishop Flambard, gave the Church of Middleham to the Prior and Convent at Durham, this is the first recorded mention of the village. In 1183 the "Boldon Book", a survey of all the land owned by the Bishop of Durham, records that there were some 32 households in the village, which was surveyed along with neighbouring Cornforth. The survey was particularly detailed and names a number of individuals such as Arkil, Ralph and William the Headborough. Bishop Middleham was one of the principal residences of the Bishops of Durham. The residence of the Bishops now only survives as {earthwork remains D1117}.

By the late 14th century the Bishop of Durham appears to have no longer used the Castle as a residence and the buildings and land were initially let out to his bailiff. By 1509 this was a man named John Hall who enjoyed a lease of 31 years. The castle and deer park passed through a number of hands over the following centuries including the Eure family of Witton Castle, the Freville's and by the 18th century the Surtees family which included the notable historian Robert Surtees, who lived nearby at Mainsforth and wrote on the village and Castle in his History of Durham in 1823.

By the 19th century the contains four public houses, a brewery, and a few tradesmen's shops. The village mainly supported itself by farming, though there was some coal mining; the remains of a wagonway have been recorded. The main railway line also ran close to the village.

The {parish church D1118} of St. Michael contains a plaque commemorating a local soldier who fought and died in the First World War whilst the churchyard contains the village memorial in the form of a cross dedicated to the men of Bishop Middleham and Mainsforth.