The land that became Liberty was part of the hunting grounds of the Otarre, or Lower Hill Cherokees, who lived in villages along the rivers that drained from the Blue Ridge into the Savannah River basin. The most prominent nearby village was Keowee, near the modern Oconee and Pickens County line. Hernando de Soto's Spanish expedition is traditionally said to have passed through the area around 1540, the first Europeans on the ground. Charleston and Savannah traders followed in the colonial period, exchanging guns, cloth, and liquor for animal skins. In 1753 the British built Fort Prince George nearby, the first white settlement in Pickens County. During the Revolution the Cherokee allied with the Crown, and the 1777 Treaty of DeWitt's Corner forced them to cede most of their territory. The Cherokee paid an enormous price for choosing the losing side. White settlement arrived in numbers in the mid-1780s.

The antebellum Pickens District that included Liberty was poor by lowcountry standards. Most farmers worked their own land. Slaveholding was uncommon here, not because the Piedmont was morally superior but because the soil and the trade routes favored small subsistence farming rather than the plantation economies of the coast. Poor roads kept goods from moving cheaply. Most social life happened through church. When South Carolina voted to secede in December 1860, the Pickens delegation voted with the rest. Almost every family in the area sent sons to the Confederate army. Several companies of infantry and cavalry were raised here. The casualties were heavy. Men who refused to enlist or who deserted carried that shame for the rest of their lives, and sometimes their descendants carried it for decades after. The women left behind ran the farms and went without. After the war, Pickens District was placed under federal martial law during Reconstruction until the state was readmitted in 1868.

Liberty became a town because a railroad came through. Former Confederate General William Easley, working as a lawyer for the Charlotte-Atlanta Airline Railway in the early 1870s, negotiated to have the tracks laid through southern Pickens County. The towns of Liberty, Easley, and Central all grew up along those rails. Mrs. Catherine Templeton deeded her land for the station that became Liberty Station in 1873. John T. Boggs set up the new Liberty Post Office that same year. The town was formally chartered on March 2, 1876, with W.E. Holcombe elected as the first mayor and James Avenger appointed first marshal. The Pickens Sentinel ran a satirical article suggesting the marshal had nothing to do except look after stray cows. The Liberty First Baptist Church traced its congregation back to 1802. The Liberty Presbyterian Church built its current building in 1883.

Jeptha P. Smith organized the Liberty Mill in 1901, the town's first cotton mill, with eighteen worker houses built around it as a mill village. The Calumet Mill, later renamed the Maplecroft Mill, followed in 1905 in a part of town called Rabbit Town. By 1920, both were under the control of Woodside Mills. The Big Mill and Little Mill, as the townspeople called them, ran for the next eighty years. At their peak in the 1970s they employed over a thousand workers across a thousand looms and were the world's largest producers of Oxford cloth. The work was grueling. Workers were called lintheads, a slur that traveled with them whenever they left the mill village. Twelve-hour days were standard. The ventilation was bad. Most families had both husband and wife in the mill, and most workers kept the job their whole lives because there was no better option in town. J. Warren Smith brought electricity to Liberty in 1910 with two gasoline generators. He also became the first fire chief in 1925. By 1928, the town was buying its power from Duke.

Foreign competition gutted the southern textile industry in the 1990s. Greenwood Mills, which had bought the Liberty operations in the 1980s, gave up on them not long after. The Little Mill came down in 2013. The Big Mill is being stripped for demolition. The former Mohawk Carpet plant in town is now occupied by Southern Vinyl Windows and Doors, one of the larger employers left. The 2020 census counted 3,366 people, a small town by any measure but not a dying one. Liberty is part of the Greenville-Mauldin-Easley metropolitan area, which means it sits inside one of the fastest-growing economic zones in the Carolinas. The film The Midnight Man with Cameron Mitchell was shot here in the 1970s. The 1999 Cuba Gooding Jr. action movie Chill Factor used Liberty for much of its location filming. The town has a Sarlin Community Library, a Mayor-Council government, and a high school called the Red Devils. The cotton-mill century is finished. What comes next is being worked out, one slow renovation and one new employer at a time.