Limestone was settled in 1849 by General Mark Trafton of Bangor, then the customs officer at Fort Fairfield. The town was named for the lime deposits that were found there. Even before the area was settled, as early as 1846, a dam and shingle mill had been constructed. Limestone was incorporated on February 26, 1869 from Limestone Plantation, which had itself been organized in 1855 from the township E R1 WELS.
The town had been best known as the home of Loring Air Force Base, closed in 1994. Since then, the base has been transformed into the Loring Commerce Center. The Aroostook National Wildlife Refuge is also located on a portion of the former air force facility. The town is also home to the Maine School of Science and Mathematics, a residential charter high school specializing in mathematics and science education.