In 1866, a rail siding was built as part of the construction of the Union Pacific Railroad. It was named Gibbon Switch in honor of General John Gibbon. General John Thorpe was originally given the town site of what became Gibbon in exchange for establishing a town site in Buffalo County.
The Union Railroad organized a colony of approximately 85 families from Ohio and other eastern states in the Winter of 1870, and planned for the building of homes in the newly established State of Nebraska. Gibbon was also laid out during this time and on April 7, 1871 a settlement commenced. A surveyor by the name of Mr. J.N. Paul helped the colonist by beginning a survey of the town site of Gibbon. This was finished by C. Putnam. The completion of the survey saw the donation of one block for a public school, one block for a courthouse and a site for a church building. All of these sites were donated by the owners.
Lack of funds, poor crops, insufficient moisture, loss of livestock, shortage of fuel and conflicts with Native Americans were all hardships the colonists had to endure. Despite these hardships and contrary to original belief, Gibbon became the center for one of the most fertile sections of Buffalo County. Although it remained a small town, it was proportionally one of the most thriving towns on the Union Pacific Line.