The Kansas Pacific Railroad established a water station on the tracks at the site of present-day Ellis in 1867, and later purchased the site for $1,200 through the Homestead Act. An officially recognized post office was established on June 27, 1870. The year 1873 saw the establishment of the first school, and one year later, the first church came to Ellis.
Beginning in 1875, Ellis became a shipping point for cattle herds, driven up from the south, and on January 10 1888, the City of Ellis was incorporated by law as a Third Class City.
In the late 1800s, Wyatt Earp and Buffalo Bill Cody were seen often in town. John Henry, a UP train dispatcher in Ellis, invented the electric streetcar in 1882. Early Ellis residents Walter and Roy Cross developed the "Cross Process," a method of converting kerosene, natural gas, oil or fuel oil into gasoline that was used widely across the U.S.
Walter P. Chrysler, who grew up in Ellis and learned about mechanical repair and machinery in the Ellis UP shop, used this knowledge to found the automotive giant, the Chrysler Corporation. Walt Disney, the late producer-animator and founder of the Walt Disney Studios, also had connections to Ellis, and President Theodore Roosevelt made a "Whistlestop" in Ellis during his presidential campaign.
Ellis was a division point on the UP for many years, there is a UP caboose located near the museum in a park, and the local sports teams are known as the "Railroaders."