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Founded in 1880, Dorchester Town were Dorset Senior Cup finalists in 1888 and 1890 before joining the Dorset League in 1896. Despite being founder members of the league, the club had little success before winning the championship in 1937/38 with a 2–0 victory at Sherborne on 25 April 1938.

The club joined the Western League in 1947, winning promotion from Division Two in 1950, and going on to take the league championship in 1954/55. The fifties proved to be a successful decade for the Magpies, winning the Dorset Senior Cup for the first time, and having a number of good runs in the FA Cup facing the likes of Norwich City, Queens Park Rangers, Port Vale and Plymouth Argyle. In 1954, Dorchester reached the 2nd Round before eventually losing out to York City in front of 5,500 fans at the old Avenue ground, in a season where York went on to reach the semi-finals.

Following four more victories in the Dorset Senior Cup, the club entered the Southern League (Division One South) in 1972. They first tasted success in this division when they finished runners-up to Margate in 1977/78, going unbeaten in the final 16 matches of the season, with manager David Best utilising his links with old club AFC Bournemouth to attract former first-teamers such as John O'Rourke, Jack Howarth and Harry Redknapp to the Avenue.

The formation of the Alliance League (now the Football Conference) unfortunately meant the Magpies ended up back in the reformed Southern Division a year later, but the club celebrated its centenary by winning the Southern Division in 1979/80 by a one-point margin over Aylesbury. Stuart Bell succeeded David Best as manager during the season, and the Magpies went unbeaten in the last 14 games to clinch the title. A young Trevor Senior impressed alongside ever-present top scorer Paul Thorne, whilst Graham Roberts joined neighbours Weymouth early in the campaign for £6,000 before going on to star for Tottenham Hotspur and England.

Senior stayed with Dorchester for a further two seasons, before signing for Portsmouth during the 1981/82 season for £35,000, going on to play for Watford, Middlesbrough and Reading, where he broke the Berkshire club's all-time goalscoring record. Before leaving the Magpies, Senior helped the club reach the 2nd Round of the FA Cup again before losing out to AFC Bournemouth in a replay at Dean Court in front of a crowd of 8,700. A goal four minutes from the end of extra time was enough to end Dorchester's dreams of a place in the third round – a feat they have still yet to achieve.

Relegated at the end of the 1983/84 season following a severe financial crisis, the club only just avoided dropping out of the league altogether the following year. However, a remarkable turnaround followed, and Dorchester returned to the Premier Division as champions at the end of the 1986/87 season, taking the title following a goalless draw at runners-up Ashford on the final day of the season.

The return to the top southern division has been a rollercoaster of emotions for Dorchester fans. Having been a mid-table team for a number of years, a brush with relegation came at the start of the nineties, and Stuart Morgan was introduced as manager in 1993. In his first full season, Morgan took the club to sixth in the league, followed by the sale of Darren Garner to Rotherham United for £30,000 during the summer.

The following seasons were a mixture of highs-and-lows, flirting with relegation on a number of occasions, facing Oxford United in the 1st Round of the FA Cup, reaching the last 16 of the FA Trophy for only the second time, and finishing fourth in the Premier Division in 1997/98.

Unfortunately in the following seasons, the Magpies were unable to rekindle the same form, and following a number of close-shaves at the wrong end of the table, the club were relegated to the Eastern Division at the end of the 2000/01 season, despite a strong FA Cup run culminating in a 3–1 First Round defeat at Wigan Athletic's 25,000 all-seater JJB Stadium.

Under the guidance of manager Mark Morris, Dorchester's young squad regained their Premier Division status within two years, defeating King's Lynn on the final day of the 2002/03 season to take the Eastern Division title ahead of Eastbourne Borough, having won 16 of their last 17 matches and scoring 114 goals in their 42 league games. A season earlier the Magpies had picked up the Southern League Cup for the first time, again defeating King's Lynn in a 4–0 aggregate victory in the final.

The first season back in the Premier Division was a difficult one but the club succeeded to reach the end-of-season play-offs, where two fine victories over Bath City and Tiverton Town saw Dorchester become a Conference club for the first time in the newly formed Conference South division. A season later the Magpies almost saw further play-off glory, but missed out on another promotion opportunity on the final day of the season, going down 7–3 at Bognor Regis Town.

A mid-table finish the following year ended with the resignation of Mark Morris – arguably the club's most successful manager in recent history – with Mick Jenkins taking charge of the first team. His reign, however, was short-lived. Despite the club's tenth success in the Dorset Senior Cup, the team narrowly avoided relegation by finishing 17th in the league, and Jenkins was sacked just a month later in the wake of Eddie Mitchell taking over the ownership of the club. Mitchell's arrival at the helm saw former Dorchester midfielder Shaun Brooks installed as Director of Football, and the club announced it would be making the step up to full-time football ready for the 2007/08 season.

In September 2014, kitman Alex Legge, aged 38, died suddenly.