Cottonwood began in 1862 as a series of way station shelters for prospectors and mining suppliers on their way south to Florence and Warrens.

It was named for the dense growth of trees that formerly lined Cottonwood Creek.

The racial makeup of the city was 97.99% White, 0.64% Native American, 0.42% Asian, and 0.95% from two or more races.

According to the United States Census Bureau, the city has a total area of 0.84 square miles (2.18 km2), all of it land.

[9] Cottonwood is home to the Dog Bark Park Inn, a hotel in the shape of a beagle.

The climate in this area has mild differences between highs and lows, and there is adequate rainfall year-round.

[10] The city is just west of U.S. Route 95, the state's main north-south highway, which formerly went through central Cottonwood.

It runs on the former tracks of the Camas Prairie Railroad, whose second subdivision line continued to Fenn and Grangeville.