The Southern Pacific Railroad built a line from San Francisco to Los Angeles which was completed in 1876. Along the line was a water stop located in what is now Lancaster. The Southern Pacific constructed homes for their employees engaged in maintaining the railroad. The Gilwyn Hotel was built near the water stop in the beautiful desert plains area and a small town began to develop.

Generally, the name "Lancaster" is attributed to a Mr. M.L. Wicks, a real estate developer who in 1884 purchased over 38,000 acres of land for a price of about $96,000 from the Southern Pacific Railroad. He then named the area for his former home, Lancaster, Pennsylvania. However, in publications pre-dating Mr. Wicks, a place called 'Lancaster' in association with the railroad was mentioned. So the name of the city may probably be most accurately attributed to the Southern Pacific.