The first known permanent white settler in the county, B. W. Hall, settled near Sherman in the early 1860s. A store was opened in 1867 and was at first known as Manistee Bridge because of proximity to the bridge over the Manistee River on the Newaygo and Northport State Road (built in 1857 and is approximately the route of present-day M-37 in the county) which connected Newaygo 70 miles (110 km) to the south with Northport on the Leelanau Peninsula 50 miles (80 km) to the north. The road opened the area for settlement, as it was previously practically inaccessible. The settlement gained a post office in 1868 named Sherman, after the Civil War General William T. Sherman. Sherman was platted in 1869 and incorporated as a village in 1887. Fires destroyed the business district and the village disincorporated sometime in the 1920s.
Sherman was the county seat until 1881, when, as a result of the so-called "Battle of Manton", the seat was moved first to Manton and a short time later to Cadillac.