Author Beatrice Krier claims that Ulao is a corruption of the Spanish word Ulloa, which was probably chosen because of a local veteran named Weber, who had participated in the Siege of Veracruz in March 1847 during the Mexican–American War, when U.S. troops under the command of Winfield Scott surrounded and overran the castle of San Juan de Ulúa, which itself was named for the Spanish explorer Francisco de Ulloa, who had navigated the western coast of Mexico as part of the 1539 expedition of the conquistador Hernán Cortés.

Much of Grafton was primeval beech-maple forest, which settlers were clearing for agriculture, and Gifford saw an opportunity for Ulao to prosper as a refueling station for steamships.

[8][3] In 1847, the territorial legislature granted Gifford a charter to build a plank road from Port Ulao west to the Wisconsin River.

[8] In 1856, eight members of the Strangite sect of the Latter Day Saint movement were forced to leave their home on Beaver Island on the Michigan side of the lake and moved to Ulao.

[9][10] The community prospered in the 1850s and 1860s and had a post office from 1850 until 1864,[11] but by the end of the American Civil War, steamships relied less on wood as a fuel source[5] and Ozaukee County's forests had been largely depleted, forcing Ulao into decline with most of the land being converted to agriculture.