Powder River County was created from Custer County on March 17, 1919, and named for the Powder River, which runs through it. The Powder River was named because of the gunpowder-colored sand on its banks. "A mile wide and an inch deep" is a favored description of the river.

The Broadus post office was established in 1900. While there are several small communities, Broadus is the only incorporated town in Powder River County. About 28% of the county's residents live in Broadus.

Powder River County is primarily a rural and agricultural county. There is limited oil and timber production, though significant reserves of these resources exist. Most of Powder River County is grazing land.