Nelsonville was settled in the 1850s, with one being Edward Daughtry in 1855; it was named for D. D. Nelson, who opened a store in the community after the Civil War ended.

The town's first settlers were primarily Bohemian immigrants who arrived in the late 1860s to the early 1870s and bought land grants.

Nelsonville's post office opened in 1872; postmaster R. W. Thompson also served as the town physician.

The community extended northwest through a watershed that separated the drainage of the east and west forks of Mill Creek toward Industry.

[4] The Roesler House, which is located in the community, is listed on the National Register of Historic Places.