In 1849, Cottonwood was known as a stop over for supplies and a bite to eat before heading up the Oregon Trail. Cottonwood became a postal station in 1852, and in 1859 A Bavarian immigrant, Jacob Foster, purchased 240 acres on the north side of Cottonwood Creek where the town of Cottonwood now lies. Foster built a hotel on his land and soon Cottonwood became a home to weary travelers.
In 1872 Cottonwood became a major shipping point for cattle, lumber and other agricultural products from the fertile lands along the Sacramento River and Cottonwood Creek after Southern Pacific Railroad Company laid its rails north.
Over the years Cottonwood has contiued to grow with its economic base in agriculture and lumber products and today tourism.