Lorimor was founded in 1887 when a farmer – J.S. Lorimor – was approached by agents of the Chicago Great Western (CGW) Railroad and asked to sell a portion of his land to be used to construct the new tracks. Instead of selling, Mr. Lorimor offered to donate the land for the right-of-way if the new station and town would be located on other portions of his farm. The deal was struck, and over the next five years, the new city quickly grew to a population of almost 400 and would eventually boast nearly 700 at its peak shortly around 1910.  A petition to incorporate was filed on March 22, 1892, with the election to incorporate held on May 14, 1892. Fifty-six votes in all were cast in the election with fifty-three votes favoring the incorporation and three votes against.

After a series of fires destroyed much of the town in the early 1890s, a city ordinance was passed requiring new buildings in the business district be constructed of brick or similar fire-resistant materials. Several of these brick structures are still in use today.