Carbon Hill was begun as a small mining town in extreme western Walker County. The city is located at(33.890690, -87.524307).
According to the U.S. Census Bureau, the city has a total area of 5.6 square miles (15 km2), of which 5.5 square miles (14 km2) is land and 0.1 square miles (0.26 km2) (0.90%) is water.
Carbon Hill, Alabama was settled in 1886 because of coal mining and the railroad. A post office was established in 1887 with John T. Anderson as the first Postmaster. By 1888, the community had grown enough to support the Carbon Hill United Methodist Church.
The Galloway Coal Company was responsible for the early development of Carbon Hill. Col. Robert Galloway entered the coal and transfer business in 1863. On May 1, 1890 Galloway bought mines and property on Carbon Hill (as it was then called) from The Kansas City Coal and Coke Company for $130,000. Galloway turned the operation into a commercial success. Other mining companies set up operations after word spread of Galloway's success.
On February 1, 1891, the Sheriff of Walker County telegraphed the governor of Alabama requesting fifty soldiers to be dispatched to Carbon Hill. Mayor Anderson wired: "There is a lawless mob here. Colored people are shot and driven from home. No arrest made. We need troops." Superintendent B. W. Whitfield of the Carbon Hill Coal and Coke Company was anxious to fire 200 striking miners, and the men had caught word of it. The strikers feared the black citizens would take their jobs.
On February 14, 1891, the town of Carbon Hill was incorporated, with John T. Anderson as mayor. February 14 is also known as St. Valentine's Day; the founding fathers wanted the tiny town to be known as The Village of Love and Luck. The notion of coal as luck derives from the cultural traditions of Scotland (where Colonel Galloway was born) - it is also customary and considered lucky in Scotland and the North of England to give coal as a gift on New Year's Day. This occurs as part of First-Footing and represents warmth for the year to come.
On May 27, 1917, an F3 tornado hit Carbon Hill, killing 6 people and destroying 200 homes in an area 3 miles wide by 17 miles long.
Carbon Hill was "especially hard-hit by the Depression," and became known for its "savvy utilization of federal resources" provided by the Works Progress Administration (WPA) and the Public Works Administration (PWA). Residents used the funding to build a new high school, and made improvements to sewers, sidewalks, and streets. 
On November 17, 1957 a category F4 (max. wind speeds 207-260 mph) tornado 13.2 miles away from the Carbon Hill city center killed 4 people and injured 15 people.
An F3 tornado destroyed much of Carbon Hill on November 10, 2002.
Carbon Hill is known for its vast selection of Christian Churches in the city. There were approximately 30 churches inside the city limits as of 2011. Two of the town's churches, the Carbon Hill Church of God of Prophecy, and the Carbon Hill First Baptist gained national attention from the media during the destruction of the 2002 tornadoes. The Church of God of Prophecy was a temporary housing and safe unit during the catastrophe, under direction of the American Red Cross and the Southern Baptist Association.
This town is served by the Carbon Hill High School, a facility of 430 students in grades 9-12. The school is widely known as the first place of employment for legendary college basketball coach "Wimp" Sanderson, and home to many great collegiate football players. The school's mascot is the Bulldog, and the colors are blue and white. The school is a member of theWalker County Board of Education. In 2002, the original school building was destroyed by fire. It was recently replaced by a new building. Carbon Hill Elementary/Junior High School which some of the students were temporarily relocated was destroyed by an F3 tornado that destroyed much of Carbon Hill on November 10, 2002.