The Cottonwood Creek was named by John C. Frémont in 1845, after he had been asked by the government of California to dispense with his "scientific" exploration, and to leave pronto, por favor.

There were three geographic and historical phases to Cottonwood`s development. First, a Yankee settlement hastily formed at the mouth (south side) of Cottonwood Creek, across from Bloody Island, and approximately a mile south of Reading's mansion, and it became a semi-permanent "town" due to immigrants from the Sacramento River and then the Noble's Trail from the east. However, farms soon developed between Ball's Ferry and Reading's adobe, then along the present day Bowman [named for the pioneer Antone Bowman], or Tehama, side of the creek, and this continued for some two and a half decades prior to the coming of the railroad. The wagon trail from Red Bluff to Shasta passed right by, and a ferry to cross the creek was established to accomodate traffic. Finally, the railroad was built, in 1872, with Chinese largely instrumental in laying track while Bavarian crews built trestles and bridges. Thus, the "founding" at the present site of Cottonwood occurred in 1872, by Bavarian immigrants led by Jacob Foster (anglicized from Jakob Forster). History accords this entrepreneur and cattle rancher the credit for establishing Cottonwood (on the north side of the creek).