The etymology of the town's name is believed to derive from the old Danish term "hamal", meaning "hill".

[3] Its expansion was the result of several initiatives taken by the count, who sought to transform the village into a market-town.

[6] Through his influence, the local court building for the judicial district of Frijsenborg-Favrskov was established in the town in 1837.

That year, Hammel station was designed by architect Heinrich Wenck and opened as the terminus of the Hammel-Aarhus Railway.

[7][8] The entire railway line closed in 1956 and parts have since been preserved as a walking path.