Nevada was first settled by Benjamin Denny. Denny moved to the area from Madison County around 1850. The town was platted by Denny and William Marshall in October, 1852. Sylvester Turpen named the town after "a city in Mexico." A post office was established in 1850. It was abolished in 1907. The first general store was opened in 1850. The first grist mill and saw mill, which were combined, were opened in 1854.
In 1881, Tom Fox murdered Erastus Nordyke in a wheat field just outside of Nevada. Fox was never arrested because he could not be found. His disappearance was described as if he had been "swallowed up in the earth."