The area was first settled around 1800 by the Sizemores, a mixed-blood (Anglo and Native-American) family migrating from North Carolina, with a brief stay in Hawkins County, Tennessee, before making it to Kentucky.

The town was established in 1878 and incorporated in 1882, and was named after John Hyden, a state senator of the time who helped form Leslie County.

[4] The mountainous terrain made the region difficult to access except by river, which was no longer the dominant form of transportation by the late 19th century, hindering growth.

Hyden briefly came to national attention when the Hurricane Creek mine disaster occurred in late 1970, 5 miles (8 km) southeast of the city.

[5] In July 1978, Richard Nixon came to Hyden to make his first public speech since resigning from the presidency during the Watergate crisis.

[6] Hyden was picked because Judge-Executive C. Allen Muncy wrote a letter inviting him to attend the dedication of a recreation facility and Nixon wanted a town that had heavily supported his presidential runs.

Leslie County Judge-Executive C. Allen Muncy claimed the Nixon invitation prompted the U.S. Department of Justice to obtain indictments of him and his associates on vote-fraud charges; while on appeal for his conviction, he won renomination in the Republican primary but lost the 1981 general election to independent Kermit Keen.

Kentucky Route 118 (Tim Couch Pass) is a three-lane highway leading northwest from Hyden 4 miles (6 km) to the Hal Rogers Parkway at Thousandsticks.