It was named by early settlers after the dead trees found in its gulch.

After Colonel George Armstrong Custer led an expedition that discovered gold in 1874, miners and entrepreneurs swept into the Black Hills. They founded the lawless town of Deadwood, which reached a population of 25,000 by 1876.

Hickok's murderer, Jack "Crooked Nose" McCall, was prosecuted twice, despite the U.S. Constitution's prohibition against double jeopardy. Because Deadwood was an illegal town in Indian Territory, non-native civil authorities lacked the jurisdiction to prosecute McCall. McCall's trial was moved to a Dakota Territory court, where he was found guilty of murder and hanged.

According to historical accounts, Charlie Utter's famous wagon train of prostitutes arrived in Deadwood in 1876 to find miners lined up along the street and cheering their arrival. The women were accompanied by two madams who had chosen the professional names Madam Dirty Em and Madam Mustachio. Prostitution proved to be a thriving industry in the male dominated town. In fact, it has been estimated that 90% of women living in Deadwood in 1876 were prostitutes.

When he was shot, Hickok was holding a pair of black aces and a pair of black eights. This has come to be called the Dead Man's Hand.

Deadwood was a rough and tumble gaming town not fit for a fine English lady. But that's where Ms. Alice Ivers found herself. Widowed and broke, she began playing poker to support herself, earning the nickname "Poker Alice." Although she later married Deadwood resident Warren G. Tubbs, she never gave up the game of poker. After all of her big wins, she would travel to New York and spend her money on clothes. She was keen on keeping up with the latest fashions and would buy dresses to wear at the poker table, partly as a business investment to distract her opponents.

The demand for law enforcement grew following Hickok's murder, and Seth Bullock's background made him the logical choice for Deadwood's first sheriff. During his tenure, Bullock took his job seriously, deputizing several residents and tackling the job of civilizing the camp. Despite (or perhaps because of) his uncompromising nature and a reputation for fearlessness, Bullock managed the task without killing anyone.

During the smallpox outbreak in Deadwood, Calamity Jane single-handedly cared for eight gold-miners. She had no training or qualifications for this role other than compassion and her childhood immunity to the disease, but she was so dedicated that one writer said she even "dropped all her vices and spent day and night nursing."

Al Swearengen ran the Gem Theater for 22 years. It functioned as a saloon, dance hall, and brothel. Swearengen lured desperate young women to Deadwood, then forced them into prostitution through a combination of bullying and physical brutality committed by him and his henchmen. The results were highly lucrative: the Gem earned a nightly average of $5,000, and sometimes as much as $10,000 (equivalent to $240,000 in 2019).

When appointed sheriff, one of Bullock's first duties was to confront Dodge City Deputy Marshal Wyatt Earp, a former horse thief who was interested in the sheriff's job. Bullock told Earp that his services weren't needed. A week later Earp left Deadwood to return to Dodge City.