This area was the intersection of several important early trails. The trail from Pilot Grove to the Cedar Falls crossing came through Cedar City, and from here a trail led north to the Janesville River crossing, Waverly and Charles City.

Paul Somoneaux, a French trapper and trader, explored the Cedar City area prior to white settlement. he disappeared for several years, but returned in 1847 and built a cabin here. He is also buried here, though the exact gave site is unknown.

Cedar City emerged in the 1850's as a convenient stopover for teamsters hauling supplies from Dubuque to the frontier settlements. The community came to include two inns, a general store and a brewery. A plat of the town was filed with the county in 1856.