In 1787,  Michael Barndollar, hailing from Frederick, Maryland, and having previously lived near Philadelphia, made a significant purchase. He acquired 400 acres of land from John Musser of Lancaster, situated where the creek known as Bloody Run meets the Raystown Branch of the Juniata River. The town he envisioned came into existence in 1795.

Barndollar, paying honor to the Revolutionary War General "Mad" Anthony Wayne, named the town Waynesburg.

However, this name failed to take root, and the locals quickly supported the more popular name, Bloody Run.

Barndollar initially developed the western side of the run but, in 1800, sold that portion to Samuel Tate of Shippensburg, PA. Subsequently, a significant part of this land was repurchased by Barndollar's son, Jacob.

On Jacob's portion of the tract, Barndollar constructed a sturdy stone building where he operated a tavern and store. The town attracted other early settlers, including Robert Culbertson and Billy Patton, both of whom ran hotels. Given its strategic location on the main route between Philadelphia and Pittsburgh, hotels and taverns played an important role in Bloody Run and near Bloody Run during this era.