Originally part of Northern Berkshire Township Number 2 and including all of Peru and parts of Middlefield and Dalton, the town was first settled in 1763 and officially incorporated as "Partridgefield" in 1771. Named for Oliver Partridge, one of the three purchasers of the town (along with Governor Francis Bernard), the Western Parish officially broke away from its eastern half and incorporated in 1804, renaming itself for the family of Rev. Theodore Hinsdale, who also owned an important woolen mill. The mill was the center of economic activity in town until the Great Depression, when it closed.

Hinsdale, along with neighboring Dalton, is home to two historic long-distance routes: the Appalachian Trail (a National Scenic Trail) and the Boston and Albany Railroad, on which operates the Lake Shore Limited passenger rail service that has run continuously from Boston to Chicago since 1897. The Hinsdale train depot located in the town center was closed in 1954, and the actual intersection of the two corridors lies at the also decommissioned train depot just north in Dalton.

According to the United States Census Bureau, the town has a total area of 21.7 square miles (56.2 km²), of which 20.7 square miles (53.7 km²) is land and 0.97 square miles (2.5 km²), or 4.45%, is water. Hinsdale is located in central Berkshire County, and is bordered by Windsor to the north, Peru to the east, Washington to the south, and Dalton to the west. Hinsdale is 9 miles (14 km) east of Pittsfield, 42 miles (68 km) northwest of Springfield, and 120 miles (190 km) west of Boston.

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