The village is mentioned in the Domesday Book . The
parish church, St. Osmund's, was totally rebuilt in 1745 and restored in 1888, although it has registers
dating back to 1550. In the 2011 census the parish had a population of
199- probably 50 or so more than today.
St Osmund’s is in the Gothic style with 5 bells and during the restoration in 1888 by the 5th Earl of Ilchester a Norman font of Ham Hill stone was found built into the masonry, the chancel was lengthened in 1910.
The major part of Melbury Osmond village lies on a cul-de-sac lane which from the church descends past cottages to a stream and ford. The attractive appearance of the village has been noted by commentators: it has been described as "a calendar smith’s dream of thatched cottages" and in 1906 Sir Frederick Treves wrote that it was "the most charming village in these Western backwoods".
In its history the village has been involved in the trade of plated buckles and horn buttons, and the manufacture of dowlas. During the 19th century, the village was home to the Dorset Ooser, a wooden mask brought out during "Rough Music" ceremonies.
There are 34 listed buildings and structures within the parish, including the Grade II* Old Rectory and the Grade I parish church.
Thomas Hardy's mother lived in Melbury Osmond as a child, and she was married in the church.The village appears as "Little Hintock" in Hardy's novel The Woodlanders, in which the heroine's name is "Grace Melbury". Hardy also incorporated a legend about the Duke of Monmouth taking refuge in one of the village's cottages into his short story "The Duke's Reappearance".