In the first half of the 19th century, the Folsom area was a hunting ground for Comanche, Ute, and Jicarilla Apache Indians. The first White settlement near Folsom was Madison, settled in 1864 and named for its founder, Madison Emery. Madison became a ghost town in 1888 when the Colorado and Southern Railroad was completed and Folsom was established nearby on the railroad line. The train was held up three times near Folsom by Black Jack Ketchum and his gang. The final robbery in 1899 led to the capture and hanging of Ketchum.
Folsom prospered in the early years with the largest stockyards west of Fort Worth. Homesteaders moved in and attempted to farm and the town reached a peak population of nearly 1,000. However, the area proved unsuitable for farming because of drought and large ranches soon replaced the small farms.
The Folsom Hotel, at the southwest of junction of Grand Avenue and Wall Street, is a historic stone building built in 1888 that served as a department store and as a hotel. It was listed on the U.S. National Register of Historic Places in 1987.
The hotel was originally the Drew & Phillips General Mercantile Store; it was modified by John Odell in 1910 to serve as a hotel. It is presently being renovated as a museum.
Folsom is commonly called a “ghost town” as it has hardly any active businesses. Most community life centers around the Folsom Museum, established 1966 in the Doherty Mercantile building. The museum, with a large collection of local artifacts, sponsors several events each year. It is open seven days a week between Memorial Day and Labor Day.