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Toano was established in the late 19th century in western James City County at the former site of Burnt Ordinary, which was named in the 18th century for a roadside tavern that had burned down. The word Toano comes from a Native American word meaning "high ground".
In 1881, the Peninsula Extension of the Chesapeake and Ohio Railway (C&O) was built through the area from Richmond to reach the coal piers on Hampton Roads at the new city of Newport News. The C&O built a railroad station at Toano.
Toano was located on the old Richmond-Williamsburg Stage Road, which is U.S. Route 60 in modern times. Interstate 64 was built through the area in the 1970s, and passes nearby. Exit 227, located at the intersection of State Route 30, is signed "Toano-West Point".
Toano is close to major Historic Triangle attractions such as Colonial Williamsburg, and the Busch Gardens Europe and Water Country USA theme parks. Smaller attractions at Lakewood Trails and Go-Karts Plus are also located nearby.