This is one of the earliest US foundry-machine shops remaining in operation and one of the few water powered. It was founded by Samuel N. Knight (1838-1913) to manufacture machinery for the gold mines of the Mother Lode region. Knight was one of several inventors experimenting with impulse turbines to exploit the area's abundant high-head water power for driving hoists, ore stamps, and other mining machinery. He patented an efficient water wheel that came to dominate the field prior to the introduction of the Pelton turbine in the mid-1880s. Knight turbines drive some of the machinery of the works.

Today the foundry continues to operate, producing gray iron castings for industry and tourism. The machine shop is still powered by water falling more than 400 feet from the ridge above Sutter Creek. Knight Foundry is also listed on the National Register of Historic Places and has been designated a California Historical Landmark.