The Newmills site first appeared on Petty and Molls' 1683 map of Donegal, marking it as one of Ireland's oldest continuously operating mill locations. This dual-purpose facility, combining both corn and flax processing, represents a distinctly Ulster tradition where these industries were deeply woven into the local farming economy. The complex passed through several hands over the centuries; from Josephy Hunter who sold it to John Devine in 1861, to Patrick Gallagher who acquired it in 1892 along with a residence, public house, grocery shop, forge, and substantial farmland, creating a thriving rural enterprise that served the community for generations.

The early 20th century brought significant modernisation to Newmills, with major improvements made around 1907 including the installation of the current waterwheel, an impressive 7.63 metre beast manufactured by J. Stevenson's Strabane Foundry in 1867. The three-storey corn mill houses all its original machinery; stones, sieves, bucket elevators, fans and a sack hoist, all still powered by water. During the Second World War, P.F. Gallagher, Patrick's son, seized an opportunity when the British Government offered grants to boost flax production for military linen supplies. He demolished the old single-storey flax mill in the early 1940s, replacing it with a more modern structure that stands today. The attached pub and grocery proved equally successful, even establishing an export trade that included supplying Sir Thomas Lipton's fledgling Glasgow grocery business with its first shipment of butter, bacon and eggs.

Recognised in 1978 as County Donegal's finest example of a mill complex by An Foras Forbatha's industrial archaeological survey, Newmills was purchased by the Irish state in 1986 and designated as National Monument No. 639. The Office of Public Works orchestrated its restoration in 1989 with help from Irish and international volunteers, preserving this remarkable snapshot of Ireland's industrial heritage. Today, visitors can explore the entire complex and witness the ingenious water-powered mechanisms that once formed the backbone of Ulster's rural economy, making it a testament to three centuries of Irish milling tradition.