The name Sherburn comes from the Old English meaning 'Bright Stream', and was first recorded in 1170. Locals consider the ancient village of Sherburn, with architecture spanning from the 17th century, as being entirely separate from the industrial landscapes of the pit villages that grew up close by to the west and at Sherburn Hill to the east (though this is now within the parish of Shadforth).

The earliest remains from the parish are of a much earlier date. Two Neolithic stone axes have been found; one at Sherburn Hall and one close to Sherburn Hospital. These may have been used by early farmers in the area who cleared trees and cultivated simple fields. Despite the discovery of these simple tools, no settlements or burials of Neolithic date have been discovered. There are, however, the remains of a probable Bronze Age burial associated with a stone-lined grave at Sherburn Grange. This might have originally been covered by a simple earth mound.

In 1131 a hospital was founded in Shilburn that was dedicated to Christ, the Blessed Virgin, Lazarus, Martha and Mary. It was built to house 65 lepers but little else is known about the hospital. A new chapel was built in 1316, but by 1434 the place was falling into decay. After the Dissolution it continued to exist. New buildings for patients were built in 1760 and a house for the master was built in 1832. The present building dates to 1868 and is now a home for for the elderly.

Another structure of medieval origin is the bridge. A bridge is first mentioned on this site in a charter dating to the late 12th century. The present bridge probably dates to around 1335, when it might have been restored following destruction by raiding Scots. It was also repaired in 1616. It carried the main road until 1930. The barn at Hallgarth Farm is a large building, also probably of medieval (1066 to 1540) date. This farm used to be part of the medieval manor house, which was owned by the Priory of Durham Cathedral.

In the late 19th century Sherburn Colliery was founded. It was first worked in 1896 and only operated until around 1914. It employed around 500 men and boys. A colliery was also established at Sherburn Hill (1835). This was a much larger affair employing over 1000 men before it was closed in 1965. Coke was manufactured here from coal supplied from the Hutton seam of Sherburn House and Sherburn Hill collieries. It had electric lighting from as early as the late 19th century.

The legacy of the First World War is encapsulated in the village of Sherburn via a number of memorials commemorating those of the village who served and died. A number of plaques and other items dedicated as memorials can be found in St. Mary's Church, Sherburn Primary School, the Parkinson Memorial Methodist Church and most recently on a memorial that was unveiled in 2007 close to the centre of the village. This takes the form of a headstone with two flanking sections that carry the names of the fallen from two World Wars.