The wooden settlement of Russa was burned to ashes in 1190 and 1194. In 1478, it was incorporated into Muscovy together with Novgorod. The word Staraya (Old) was prefixed to the name in the 15th century, to distinguish it from newer settlements called Russa.
In the 15th–17th centuries, the ancient merchant town changed into a prosperous industrial centre, with saltworks as the principle business activity. When Ivan the Terrible ascended the throne, Staraya Russa was the fourth most populous city in Russia, after Moscow, Pskov and Novgorod. During the Time of Troubles it was held by Polish brigands and heavily depopulated. Only 38 people lived there in 1613.
In 1824, Tsar Alexander I created the so-called military settlements near Staraya Russa, which would be a stage for an uprising in 1831 as part of the Cholera Riots. The town was fictionalized as Skotoprigonievsk in Dostoyevsky's novel The Brothers Karamazov (1879-80). The Soviet authority in Staraya Russa was established on November 5(18), 1917. The city was occupied by the Germans between August 9, 1941 and February 18, 1944. Totally destroyed by them, it was later restored.
Like much of Russia, Staraya Russa has seen its population decline since the collapse of the Soviet Union.
The ancient monuments include the Transfiguration monastery, with a cathedral built in 70 days in 1198, partly rebuilt in the 15th century, and several 17th-century buildings and churches. The principal city cathedral (1678) is dedicated to the Resurrection of Christ. Other notable churches are consecrated to St George (1410, family temple of the Dostoevsky family), Mina the Martyr (14th century), and the Holy Trinity (1676).