The geology of Smoke Hole Canyon reads like a textbook on Appalachian mountain-building, except the textbook has been cracked open and turned inside out. The gorge exposes the interior of the Cave Mountain Anticline, a structure dominated by rocks ranging from Lower Silurian to Middle Devonian age. The canyon walls rise with near-vertical steepness in places. But the most dramatic geological story is how the river ended up here at all. Eons ago, through a process called stream capture, the South Branch Potomac was diverted cataclysmically from its old bed westward into what would become the present gorge. Geologists believe the river first traversed the region underground, flowing through a vast subterranean channel. When the roof collapsed, it formed the karst topography visible today. Before the river exits Cave Mountain Gap at the canyon's southern entrance, it pushes through a narrow channel of ferocious rapids known locally as the "Rock Break." Nearby, Big Spring discharges 1,040 gallons per minute from the base of Cave Mountain, and explorers have mapped over two miles of passages in the cave above it without ever finding where the water connects.

The first Smoke Holer was a man named Steele, given name now lost, who arrived sometime in the 1750s. He built a cabin near what is now the still-standing Palestine Church. His daughter Katie married pioneer George Full in what was the first wedding celebrated in the canyon. Another daughter, Susie, went out alone searching for a family cow and was attacked by a wandering band of Native Americans. Her father found her scalped; she died soon after, and he buried her on a small promontory still known as "Susie Hill." Revolutionary War veteran William Eagle, born in 1761, returned after the war and is buried near the 300-foot-high crag that bears his name. But the most unexpected early settler was Charles Bleachynden, a Hessian soldier, one of the German mercenaries who had surrendered at Yorktown in 1781 with Lord Cornwallis. He came to Smoke Hole as a former enemy and stayed as a neighbor. The earliest families sustained themselves by smallholder farming, hunting bison, elk, and puma in the surrounding woods, and harvesting huckleberries, chestnuts, maple sugar, and wild honey from the mountainsides.

The Civil War divided Smoke Hole bitterly. Cave Mountain Cave, known then as "Big Cave," had supplied saltpeter for gunpowder since the earliest settlements. Confederates mined it again during the war, using the 46th Regiment Militia and coercing local men too old or too young to be drafted into the hard labor. But the Smoke Holers were not generally slaveholders, and most became overwhelmingly Unionist. Union-supporting Home Guards, known locally as "Swamp Dragons," destroyed the Confederate saltpeter works. Confederate partisans called the "Rebel Raiders" retaliated with ambushes and killings that left a legacy of bitterness lasting generations. The political reversal was total: Smoke Holers, once staunch Democrats like most antebellum Virginians, became inveterate Republicans. By the 1920s, moonshine had become a booming cottage industry. High-quality liquor was made for local consumption and distributed on the black market for hundreds of miles around. Federal "revenuers" destroyed many stills and sent moonshiners to the penitentiary for typical one-year terms. Not uncommonly, an offender would serve his sentence, walk out, and promptly resume production. Despite wild stories, no revenuer was ever assaulted or disappeared in the canyon.

Smoke Hole holds a biological secret that defies its Appalachian address. The canyon is believed to contain the largest area of limestone forest remaining in this region of the country. While most West Virginia forest soil is naturally acidic, Smoke Hole's limestone soil supports a different type of plant life entirely. The dry, prairie-like ridgetops harbor plants normally found west of the Mississippi River: prairie flax, prairie rocket, Indian grass, and little bluestem. Rainfall here is unusually light, only 30 to 32 inches per year, sheltered by the surrounding mountains. This low precipitation allows these western prairie species to persist in a small Appalachian haven. About a dozen species of plants and animals in the canyon are considered globally rare. In 1933, a botanist documented 283 species of flora on four-acre Hermit Island alone. The canyon shelters about 40 percent of the world's population of the endangered Virginia big-eared bat and the largest single colony of Indiana bats in the eastern United States. Bald eagles nest in the surrounding mountainsides, and scarlet tanagers, wood thrushes, and neotropical migrant warblers find sanctuary in the secluded gorge.

A 1940 account from the West Virginia Writers' Project captured Smoke Hole's character with precision. The canyon had 113 registered voters, 81 of whom belonged to just seven families: the Alts, Ayres, Judys, Kimbles, Selfs, Shreves, and Shirks. The Kimble clan alone boasted 29 votes. A local saying held that the Smoke Hole had "only one Democrat and lightnin' killed him." Saturday entertainment meant gathering in jeans-clad groups at Shreve's Country Store to discuss crops, hunting, and politics. Visitors in the late 1930s found the residents speaking with archaic forms handed down from eighteenth-century settlers: "postes" and "beastes" and "ghostes," "clumb" for climbed, "holp" for helped, "rifle-gun" and "tooth-dentist." The Great Depression and World War II emptied much of the canyon. Electric and gas service reached the remaining residents only in 1949. Today, Big Bend Campground marks the end of the road. Beyond it, the South Branch runs for thirteen miles through trackless wilderness before emerging from the gorge, a stretch where the old homestead roads have vanished and the canyon belongs to the river, the bats, and the rattlesnakes.