Ransom was a planned community; ads were placed in the Streator Monitor as early as 1876 calling for shopkeepers, craftsmen, and tradesmen to locate and set up shop in the area.

The earliest businesses in Ransom included a hotel, saloon, doctor, carpenter, pharmacist, grocery store, cash exchange and a blacksmith.

On the edge of the newly developing business district a small wooden water tower was constructed.

[4] After the fire, and much back and forth, the village constructed a new public waterworks with a 68 feet water tower at its center in 1896.

The village flourished after the fire, eventually reaching a population peak of around 600 following World War II.

[4] The village was named for American Civil War general Thomas E. G. Ransom, who was born in Vermont but lived as a young man in Illinois.

According to the 2021 census gazetteer files, Ransom has a total area of 1.00 square mile (2.59 km2), all land.