Originally known as Blockersville, Stedman was named for the family of John C. Blocker. The name was shortened to Blockers when the stagecoach station and a post office were constructed and remained the same until the Cape Fear and Yadkin Valley Railroad was built from Fayetteville to Wilmington.

Foresighted citizens of the small settlement obtained a railroad station by donating the right-of-way. David and Kelly Sessoms provided land for the station, which was built by local residents. Nathan A. Stedman was instrumental in locating the railroad in the community and the Town was renamed in his honor.

In 1913, the town was incorporated by an act of the North Carolina Legislature, which provided for corporate limits of the town's one-mile square. It further provided that “no spirituous vinous or malt liquors shall be manufactured or sold within the corporate limits of said town.”