Adam Stephen was born in Scotland and became a surgeon in the British Royal Navy. He moved to Virginia in 1748 and practiced medicine in Fredericksburg and later acquired a plantation north of Winchester on what was then the frontier and is now Jefferson County, West Virginia. During the French and Indian War, Stephen rose from captain to lieutenant colonel under Colonel George Washington and was acting commander of the Virginia troops in Washington's absence. Stephen was with Washington at the surrender of Fort Necessity in 1754 and at Braddock's defeat in 1755.
Stephen volunteered for service during Dunmore's War of 1774, although he was not present at Point Pleasant when Virginians defeated the Shawnee and their allies. He took part in colonial protests against British tax policies and attended the second and third Virginia Conventions in 1775. At the second convention, which adopted Patrick Henry's motion to put the colony into a state of defense, Stephen served on the committee with most of the colony's political and military leaders to draw up the plan. His conduct at the election for the third convention resulted in his being expelled from the convention.
Stephen became colonel of the 4th Virginia Regiment, part of the Continental army, in May 1776, and Congress elected him a brigadier general in September of that year. He distinguished himself at the Battles of Trenton and Brandywine during the following year, but at the Battle of Germantown on October 4, 1777, he gave a premature order for retreat that created chaos in the American army. He was tried at a court-martial and dismissed from the army for his conduct and for frequent intoxication.
Stephen represented Berkeley County in the House of Delegates from 1780 to 1784 and founded the town of Martinsburg, which is now in West Virginia. He was elected to the Virginia Convention called for June 1788 to consider the proposed new Constitution, and during the convention he made two speeches supporting ratification of the Constitution and voted for its ratification. Adam Stephen died at his home in Martinsburg on July 16, 1791.