Jefferson was founded in 1866 after gold was discovered in the area. Some mining started in 1871, but it didn't really take off until 1874, when a townsite was platted out. The townsite consisted of a lower section and an upper section three-quarters of a mile up the canyon. The townsite consisted of general mercantile stores, three blacksmith shops, three boarding houses, a Wells fargo express office, drugstore, barbershop, restaurants, hotels, lumberyard, sawmills, brewery, bakery, school, and livery stable. By 1876, jefferson had a population of around 800.

By 1878, both mills had shut down and the town was abandoned. A small revival occurred in 1908 and continued beyond 1917 until it became unprofitable.