The derivation of the name Goodnestone probably dates back to around 1050 when the Saxon Earl Godwin owned the manor, later known as Godwineston. Some of the existing properties are 15th century and many, such as Saddlers Cottage and Forge Cottage have names recalling trades of previous occupants.

The present Goodnestone House was built by Brook Bridges in 1704 on the site of an older dwelling and later extended in 1790. Formal gardens and avenues were laid out and these gardens are now a recognised visitor attraction.

The village has an interesting connection with Jane Austen who visited on many occasions as her brother, who married one of Sir Brook Bridges daughters, lived at nearby Rowling House.

Holy Cross Church is Saxon in origin but was beautifully reordered by Rickman and Hussey between 1839 and 1841. The church has six bells and a magnificent organ dating from 1904. The organ was restored in 2015 and the church hosts regular concerts.

The BBC Domesday Reloaded project recorded a snapshot of everyday life across the UK in 1986. There are some interesting photographs and charming descriptions of Goodnestone and the surrounding area that are well worth reading. These are available online here.

In the late 60's the partial remains of a young mammoth was discovered in Claypits about half a mile from the centre of the village. These were moved to the Natural History Museum. The school logo consists of a picture of a mammoth with the words "small is beautiful" round the outside.