The Chugwater area, with its proximity to Fort Laramie, was visited by some of the earliest Western expeditions, including that of Stephen Watts Kearny in 1845, and cattle were first wintered in the valley as early as 1859.

Hayden's photographer, William Henry Jackson, noted in his journal that the Chugwater area was a wintering area for cattle: "A very conspicuous feature which we notice in descending the valley of the Chug is the high bluff of Lower Cretaceous sandstone, which stretches away toward the northeast like a hugh wall.

the jointage is so regular that it presents the appearance of massive mason-work gradually falling to decay.

The sides of these sandstone walls are from 40 to 60 feet perpendicular, sometimes overhanging, large masses of which have broken off and fallen to the base.

The valley of the Chug is 100 miles long, and is a favorite place to winter stock.

It was as a result primarily of the Swan Land and Cattle Co., and the railroad, that the town of Chugwater grew up.

The town grew slowly, but in 1904 a Masonic Hall was constructed, and the Grant Hotel opened in 1912.

[5] As late as the 1940s, Chugwater was still a railroad stop where cattle were loaded for shipment east to the Union Stockyards in Omaha, Nebraska.

The bucking horse on the logo, that he rode at the Cheyenne Frontier Days rodeo in 1909, was Steamboat, who was foaled at Chugwater in 1896.

[7] The former Speaker of the Wyoming House of Representatives, Harold Hellbaum, farmed and ranched in Chugwater.

Some historians hold that the name "Chugwater" is derived from a Mandan account of a bison hunt.

"[8] The iconic black horse named "Steamboat", who was the model for the bucking horse and rider motif on Wyoming license plates, came from the Tyrrell ranch located near Chugwater, and was given to the Cheyenne Frontier Days organization by the ranch's general chairman, Ace V. Tyrrell.

[9][10] Steamboat was first ridden at a Frontier Days rodeo in 1909, by Clayton Danks (1879 – 1970) who was then working as a ranch hand in the Chugwater area, and was stabled for many years south of Chugwater near Cheyenne, in an historic barn owned and maintained by Mike and Linda Holst.

[12] According to the United States Census Bureau, the town has a total area of 3.06 square miles (7.93 km2), all land.

Public education in the town of Chugwater is provided by Platte County School District #1.

[21] Chugwater lost its only grocery and gas station when an SUV crashed into Horton's Corner on December 30, 2012, resulting in a fire that burned the convenience store.

[21] The loss of the convenience store has forced residents to drive to Wheatland, or to Cheyenne, to buy basic necessities, such as groceries.