The name Knockaderry is from the Irish Cnoc an Doire, which means 'the hill of the Oak'. There is still an oak grove evident near the village. Cloncagh, originally spelt 'Clouncagh', which comes from the Irish Cluain Cath, means 'the meadow of the battle'. During the ministry of Canon Lyons as parish priest, the "u" in Clouncagh was dropped although it can still be seen on some of the signs entering the parish.

Knockaderry was once in the parish of Clonelty. The present day parish was initially known as the parish of Grange. By 1704 the name had been changed to the parish of Clouncagh, Clonelty (Ballynoe) and Grange, which were the old pre-Reformation parishes. With the death in 1853 of Clouncagh's parish priest, Fr James Quillinan it was decided to unite the parishes and Fr Denis O'Brien became the parish priest of the new parish of Knockaderry/Clouncagh.

St Maidoc or Maedoc first introduced Christianity to the area in the sixth century when he built an abbey here. There is a legend that St Patrick was in this area spreading the gospel, it is claimed that he rested one night near the site of the old church of Cloncagh in a small enclosure.

A patent was granted to John Jephson in 1711 for the holding of fairs in Knockaderry.

The village of Knockaderry was burned to the ground in 1789 when, according to Begley, a maid "Carelessly left a candle lighting when retiring to rest. This set fire to some straw in the room and the flames spread rapidly to the little street consuming all before it, but fortunately no lives were lost."

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