[citation needed] A third possibility is that the town was named for a Palouse tribal chief and signer of the Yakima Treaty of 1855.

His name appeared with various spellings, including Kohlotus, Quillatose (by future governor Isaac Stevens), Qalatos, and Kahlatoose.

Soon after, the Spokane, Portland and Seattle Railway began construction on a second railroad on the south shore of nearby Kahlotus Lake, including tunnels through the basalt cliffs near the southeast corner of town.

The town boomed during construction of the railroad, local legend claims that nearly 20 saloons, a bank, newspaper, brothels, and other businesses appeared to serve the rail crews.

The dam also made the Snake River navigable, allowing grain to be barged downriver rather than being carried by train.

The Burlington Northern Railroad tracks along the south end of the lake bed and Devils Canyon were abandoned and removed in the late 1980s, and the right of way became part of the Columbia Plateau Trail State Park.

State Route 260 passes through Kahlotus as it follows the path of the coulee from Connell in the west to Washtucna in the east.

State Route 263 has its northern terminus in Kahlotus, from which it extends through the Devils Canyon to the Lower Monumental Dam on the Snake River six miles south of the city.

The Columbia Plateau Trail passes through Kahlotus, entering the city from the east along Washtucna Coulee before turning south into the Devils Canyon.

The steep walls of the coulee rise hundreds of feet dramatically to the north and south of the city center.

[7] According to the United States Census Bureau, the city has a total area of 0.38 square miles (0.98 km2), all of it land.

Most likely, the lake disappeared due to a combination of several consecutive years of below average rainfall and increases in irrigation withdrawals within the valley.

The residents of the Kahlotus area are involved in cattle and wheat farming, as well as work for various government agencies, including the Corps of Engineers at Lower Monumental Dam, Lyons Ferry Fish Hatchery, and Coyote Ridge Corrections Facility.