Thomas Sanctuary, Vicar of Powerstock, founded Powerstock School in 1848. The school building looks rather like a small church, and in fact it was once a chapel, dating from the 12th century, in nearby West Milton. It was moved to Powerstock between 1873 and 1876, to provide an extra schoolroom.

An increase in pupil numbers led to the addition of a temporary classroom in 1994. This classroom was occupied by Seatown Class (Year 5 and 6 pupils). A permanent extension, which included a classroom, staff room and toilets, was completed and dedicated by the Bishop of Sherborne in May 1999. An office extension was added to the school in 2009.

In October 2011 a major fire completely gutted the old Victorian school building. Following the fire, the school underwent major alterations and refurbishment. This included a new KS1 outdoor learning area and a two story extension to the school, along with two new KS2 classrooms within the old school building.