The unusual name, Rural Retreat, often provokes people into wondering where such a name originated. The origin of this name is perhaps unknown. The present town of Rural Retreat on the Lee Highway used to exist on the site of Mt. Airy (a German settlement of colonial times had its center there). One of its leading men, Robert Doak, was a member of the House of Burgesses for Fincastle County, 1773-1775. History reveals that this German settlement existed before Wythe County was formed from Montgomery County in 1789. The early settlers in the vicinity of Mt. Airy experienced the typical tribulations and hardships of people on the frontier. Their life was primarily centered around family units and a tavern which was present in this general area.

In 1856 the East Tennessee, Virginia and Georgia Railroad was built through Southwest Virginia. This railroad was built through the present site of Rural Retreat about 1856. Because of the facilities afforded by the railroad the activities tended to be centered at the present site of Rural Retreat. The name of Mt. Airy was discontinued so as not to be confused with the Mt. Airy of North Carolina. It has been reported that a General Mahone suggested the name of Rural Retreat.