In 1869, Colonel Edwin Smith Graham and his brother, Gustavous Adolphus Graham came to Texas as shareholders in the Texas Emigration & Land Company. In 1871, they purchased a crude salt works on Salt Creek from A.B. Gant, near where the town of Graham is now located.

At the time, the Graham brothers renovated the Salt Works, all adjacent territory was heavily populated with buffalo, and the fact those animals seemed to prefer the area, caused them to get the idea this territory would be one of the finest cattle raising districts in the entire state of Texas.

In 1872, the Graham brothers decided to establish a town adjoining their salt works. G.A. Graham and his chainman, Capt. Absalom B. Grant surveyed and plotted a town site with unusually wide streets, large blocks, and spacious lots, with the name of the town, of course, coming from that of its founders.

Graham became the county seat of Young County in 1874 after the county was reorganized. By 1876, the first courthouse in Graham was built to serve the needs of the county.

The Graham Leader, the town's first newspaper issued its first edition on August 16, 1876, edited by J.W. Graves. This weekly publication is still in existence, and is the oldest publication in Northwest Texas.

In 1877, farmers began arriving in the territory near Graham in considerable numbers. In that year, there were 100 buildings in the town. Graham had the only terminus of telegraph lines in Northwest Texas, and was the only means of connection with the outside world for a considerable distance in every direction. In 1876, Graham's first subscription school held classes enrolling fifty students, with J.M. Brantley serving as superintendent and J.I. Bowie as the first teacher. The first church in town was the Presbyterians, organized by Reverend C.H. Dobbs, in 1876. The Presbyterians were the first church to town to erect a building.

On February 17, 1877, there were 100 cattlemen of North and west Texas gathered in Graham to form the Cattle Raisers Association of Texas. The organizational meeting was held under a large live oak tree near the northwest corner of the downtown public square.