The city was named for Sidney Dillon, president of the Union Pacific Railroad.

[6] It was founded in 1867 by the Union Pacific and grew up around the military base of Fort Sidney (also known as Sidney Barracks), where soldiers were stationed to guard the transcontinental railroad against potential Native American attacks.

[7] The town became the southern terminus of the Sidney Black Hills Stage Road which used Clarke's Bridge (near Bridgeport, Nebraska) to allow military and civilian traffic to reach Fort Robinson, Red Cloud Agency, Spotted Tail Agency, Custer, South Dakota, and Deadwood, South Dakota in the late 1870s and 1880s.

[8] Sidney is home to one of the Old West's Boot Hill cemeteries; many of those interred there were soldiers from the fort.

[10][11] Approximately 2,000 jobs were eliminated, while about 120 were relocated to the Bass Pro Shops headquarters in Springfield, Missouri.

[12] According to the United States Census Bureau, the city has a total area of 6.93 square miles (17.95 km2), all land.

The city is presently located at the junction of U.S. Route 385 with I-80, and its location approximately halfway between Cheyenne, Wyoming, and North Platte, Nebraska, has encouraged the growth of the city as a major transportation service area on the Interstate.

Because the I-80/US 385 interchange is located several miles southeast of the town center, a new commercial area has developed, including truck stops, convenience stores, the building that housed Cabela's former world headquarters, shopping centers, motels, restaurants, and other commercial enterprises.

In recent years, the city has seen further growth with the construction of wind farms in this portion of the Nebraska Panhandle and adjacent areas of Colorado, including Peetz.

The 2020 United States census[16] counted 6,410 people, 3,062 households, and 1,489 families in Sidney.

Precipitation is greatest in the summer months, with an annual average of 16.84 in (428 mm) The Sidney Stage Line operates Monday-Saturday, with 12 stops on a deviated-fixed route throughout the city.

[21] On November 13, 1984, AT&T ended the era of America's cord switchboards when the Sidney office closed.