Colton was named in about 1892 by two residents, Joshua Gorbett and a man named Cole, who each wanted to name the community after the other. The Post Office Department thought "Gorbett" would be confused with Corbett, so the community was named "Colton" instead. The Colton post office was established the same year. Its ZIP Code is 97017.
Colton is located on Milk Creek, a tributary of the Molalla River, in a broad canyon eroded in a plateau of volcanic basalts and ash of the nearby Western Cascades. Canyon Creek, which drains Green Mountain's slopes to the South, joins Milk Creek just east of the community.