Dawson County created quite a bit of excitement in 1873, not only in Nebraska but also across the country. It was reported that year that gold had been discovered about 1½ miles east of the settlement of Plum Creek. As word spread, gold seekers flocked to the area in search of their fortunes. The pieces of metal that had been dug up were later determined not to be gold and those that came to the area in hopes of find great wealth went away empty handed.
The county's original boundaries were established by the Territorial Legislature in 1860. A proclamation signed by acting Gov. William James in 1871 officially organized the county. It was named in honor of Jacob Dawson, who was the first postmaster in the settlement of Lancaster, the forerunner to the state's capital city.
Ten years before the county was organized, a telegraph line was located through the area. Small settlements and ranches quickly sprang up every few miles along the line. The most significant of these early settlements was called Plum Creek, on the Overland Trail along the south bank of the Platte River. As a telegraph and stage coach station, Plum Creek became an important stopping point between Fort Kearny and Fort McPherson. Within a short time the Union Pacific Railroad passed through the area.
Plum Creek was the primary settlement of the county. A post office, school and churches were built in the early 1870s. The most important construction project, however, may have been a bridge built across the Platte River. Since the only other bridge across the river was located about 150 miles to the east, the Plum Creek bridge further opened the area to settlers.
Plum Creek continued to grow and in 1886 it was incorporated. Three years later the residents held a town meeting and decided to rename the community in honor of a famous battle that occurred during the Civil War. From that point on, the county seat of Dawson County would be known as Lexington.