The Oregon Trail Brewery Company was incorporated as Brewing Northwest, Ltd. on March 20, 1985 in Corvallis, Oregon and began beer production on July 15, 1987. When Oregon Trail Brewery opened in 1987, it was the first new brewery in the Willamette Valley outside of Portland since Prohibition was repealed in 1933. In 1987, the definition of a microbrewery was a brewer that produced less than 10,000 barrels per year.

The brewery was a "Sub Chapter S Corporation" of the company Brewing Northwest, Ltd. and was financed with shareholder investments. It opened in 1987 at 341 SW 2nd Street, Corvallis, Oregon, in "The Old World Center." Ted Cox was the owner of the building, as well as the owner and manager of the Old World Deli (OWD), which still adjoins the brewery. Cox opened OWD in 1977, ran a homebrewing supply shop in the space, and bought the building in 1986. The OWD complex was called "an improbable blend of faux-medieval architecture, bohemian mini-mall, performing arts space and de facto town square" in 2015.

Jerry Shadomy, the original brewer, co-owned the business with his wife Nancy; they worked with volunteers to transform the back corner of the OWD into a three-story brewery. Beer production officially began on July 15, 1987 under the name Oregon Trail Ale; Jerry used malt from Washington and Wisconsin and hops from the Willamette Valley. Before that, 40-year-old Jerry ran a landscaping business with 35 year-old Nancy and was an award-winning homebrewer. Jerry won Best of Show at the 1986 State Beer Festival. Although Jerry had been brewing since 1980, he had no previous professional brewing experience; nonetheless, they raised over $80,000 from investors, secured a $30,000 loan for operations, and arranged a five-year, rent-free lease with Ted Cox.

Like many early microbreweries, Jerry started with used equipment. He purchased the original 7-bbl brewhouse from Hart Brewing in Kalama, Washington and two of the fermentation vessels came from Canada. The brewery was housed on three levels, with a total of 1,800 square feet, and was set up to take full advantage of gravity at every stage. The top level of the brewery housed a 6-ton malt hopper, which was gravity fed through a roller mill. The malt was cracked and became a grist as it entered the mash-tun with hot brewing water. Their base malt was a two-row Klages and that was combined with smaller quantities of bagged specialty malt as needed. The wort was transferred to the second floor copper kettle and then to the ground floor where the hops were added.

The brewery operated in plain view of the OWD's customers and the deli was the brewery’s first draft account. Jerry focused on traditional English ales, including an Empirical Brown Ale, Oregon Trail Ale, Oregon Trail Chinook Stout, and winter porter. In 1990, Hubert Smith offered an evocative narrative of the brewing process at Oregon Trail. He wrote that "Shadomy ferments warm and matures warm, starting the beer at 70 degrees and aging it for up to four weeks at 50-55 degrees. This permits flavor compounds produced by the ale yeast to infuse the beer with pleasant, subtle, fruity flavors. 'Fruit' in an ale is as much an aromatic as it is a taste, a luscious melding with malt and hops."

Initially, Oregon Trail beers were quite good and the company’s growth was consistent, if still a bit slow. Jerry had good exposure at various festivals, including the then-fledgling Oregon Brewers Festival. However, due to lack of consistent flavor and quality control, they lost many accounts. Shortly after expanding from 300 barrels to over 1000 annually, a series of personal and financial problems collided with unwanted bacterial infections in the beer; this led to a foreclosure of the loan by Cascade West Financial. The brewery closed in October 1992.

On March 14, 1993, Dave Wills, an original shareholder, purchased Jerry's shares and stopped the final foreclosure. Wills served as the President, Secretary, and Chairman of the Board of Directors. He was responsible for finances and oversaw production, sales, and distribution until 2020. In 1983, he had started Freshops, a hop marketing company that supplied hops to small breweries and homebrewers. He was also a Christmas tree grower.

In 1992, Wills hired Jerry Bockmore to serve as brewmaster and company Vice President; he was in that role from 1992-1998. Bockmore was a brewer for Hart Brewing Company in Kalama from 1989 to 1992; he was also the founder of the now defunct Yamhill Brewing Company. When he started at Oregon Trail, Bockmore removed the two open fermentors, which eliminated the brewery’s biggest infection risk. Other equipment changes included the addition of glycol temperature control for the fermentation tanks and the purchase of Zahm & Nagel CO2 and air testing equipment. All kegs were changed from Golden Gate to Sankey to better match what the rest of the industry was using. A thorough cleaning of the entire brewery was all that was left before brewing could begin again.

This all cost money and in 1994 there was a call to increase investments to purchase more equipment, including more fermenters and a bottling machine. At that time, the capacity of the brewery was 91 barrels (182 kegs) per month. At full capacity, the five fermenters at the facility could produce 200 barrels (400 kegs) per month or 2,400 barrels (4,800 kegs) per year. When compared to other breweries in Oregon at that time, their production was approximately 1/3 of Deschutes Brewery and 1/10 of Widmer Brothers Brewing sales in Oregon. At the time of the call for investors in 1994, the Board of Directors floated building a larger brewery in another location and installing a larger bottling line. The move to a new facility never happened, nor did they ever bottle on a large scale. Working in a three-level brewery in a historic building was good for gravity flow, but prevented them bottling beer because of the lack of floor space; instead, Oregon Trail Brewery continued to primarily offer beer in kegs and "party pigs," which are 8.5 liter reusable beer dispensers that kept beer fresh and carbonated.

Bockmore and Wills launched with a Witbier as the flagship beer, which was followed by their Brown Ale. In 1994, the brewery made five beers. Oregon Trail White Ale had been introduced in June 1993 and was a Belgian style wheat beer spiced with coriander and orange peel. In October 1993, they'd introduced Oregon Trail Brown Ale. In December, they produced a seasonal Christmas Ale, which was partially brewed on a contractual basis at the Everett Street Pub in Portland. Oregon Trail Ale, a German style ale (kolsch), had been introduced in February 1994. Oregon Trail Stout debuted on St. Patrick's Day. Nearly 20 years later, in 2012, they still made Witbier and Brown Ale, but had added Smoke Signal Rauchbier (a stronger, smoked-malt version of the Brown), an IPA, a Ginseng Porter (a robust porter infused with American, Korean, Siberian, & Tienchi ginseng), a Bourbon Barrel Porter, and seasonals like Blackberry Wit. In 1989, Oregon Trail Brown Ale was awarded a Beer of the Year award by Fred Eckhardt. Oregon Trail Brown Ale also won silver medals in 1994 at the Great American Beer Festival and in 1995 at the World Beer Championship.

In 1994, they had contracts with four distributors and approximately 40 accounts where their beer was served between Corvallis and Portland; however, they only offered their beer in kegs until 1995, which made distribution and competition with other Oregon breweries difficult. By 2005, they focused on distribution to Corvallis, Eugene, and Newport. They took advantage of the brand name "Oregon Trail" in their labelling, marketing, and beer names. In addition, they had an authentic covered wagon they brought to festivals and occasionally used to deliver beer.

The company continued to have ups and downs for employees and customers. From 1997 to 2002, there were concerns over licensing and serving at beer events; as a result, there was a gap in Wills' involvement and brewery production in those years. In 2003, Don Pfeifer, a retired OSU microbiologist, started working as the Oregon Trail Quality Control Microbiologist, which helped maintain consistency in the beer. Turnover at the brewery was high (nearly a brewer a year), but working there offered OSU students and new brewers an opportunity to work on a manual, and oftentimes challenging, system. Beer was sold at festivals and fairs, on draft at restaurants in Corvallis (Nearly Normals, Squirrel's Tavern) and for a time in Portland (Westside Dublin Pub), through direct sales to the public from the brewery, and at The Old World Deli. The deli was the brewery's main account.

Waylon and Toby Pickett bought The Old World Center in 2020 and reopened it in 2021 after substantial renovations. The Oregon Trail Brewery is owned and run by Waylon's brother, J.D. Pickett.