Krasnozavodsk was founded in 1915 as a settlement servicing a mechanical factory. Initially, it had no name. After 1917, it would be called Vozrozhdeniye (Возрожде́ние, or "Revival"), Zagorsky (Заго́рский; due to its vicinity to the then-Zagorsk), and Krasnozavodsky (Краснозаво́дский). In 1940, the settlement was turned into the town of Krasnozavodsk. In 2000, the town of Peresvet was detached from Krasnozavodsk.
Some seven kilometers north of Krasnozavodsk is the settlement of Bogorodskoye, known as the center of one of the oldest popular handicrafts—fretted toys and small sculptures made of soft kinds of wood.
