The Cimarron Cutoff of the Santa Fe Trail brought trade caravans and homesteaders through this area after William Becknell first blazed this route on his way from Santa Fe back to Missouri in 1821. However, come 1861 the Union Army was too occupied with the Civil War so the Cimarron Cutoff was abandoned because of increasing Comanche raids. Virtually all Santa Fe Trail traffic switched over to the safer Mountain Branch. Then the Santa Fe Trail itself was essentially abandoned when the Atchison, Topeka & Santa Fe Railroad finally completed their rail line into the neighborhood of Santa Fe (they actually went through Lamy, several miles southeast of Santa Fe because they didn't want to deal with that difference in elevation, and they probably would have had to buy a right-of-way into Santa Fe as the federal government didn't "give" them one).

Clayton was officially founded in 1887, amidst the wagon wheel ruts left over from earlier Trail travel, but there was already a small settlement around the supply stores and such for the cattle ranchers in the area. Clayton was named for a son of US Senator Stephen Dorsey (a Reconstruction-era politician who built a huge mansion in the plains northeast of Springer and died later in political disgrace). Clayton was set up by the railroad as a cattle shipping center for herds based in the Texas Panhandle and Pecos River Valley.

One of the early families to settle in Clayton was Tom Boggs and his wife, Rumalda. The town of Boggsville (to the north in the Arkansas River Valley) was being abandoned after being bypassed by the Atchison, Topeka & Santa Fe Railroad and they moved their family to Clayton. Among their family were 6 of the children born to Kit Carson and his wife, the former Josefa Jaramillo.

Fossilized dinosaur footprint at Clayton Lake State Park, Clayton, New Mexico
A fossilized dinosaur footprint at Clayton Lake State Park