Denver City was founded in November 1858 as a mining town during the Pike's Peak Gold Rush in western Kansas Territory. That summer, a group of gold prospectors from Lawrence, Kansas, had arrived and established Montana City on the banks of the South Platte River. This was the first settlement in what was later to become the city of Denver. The site faded quickly, however, and by the summer of 1859 it was abandoned in favor of Auraria (named after the gold mining town of Auraria, Georgia), and St. Charles City.
On November 22, 1858, General William Larimer, a land speculator from eastern Kansas Territory, placed cottonwood logs to stake a claim on the bluff overlooking the confluence of the South Platte River and Cherry Creek, across the creek from the existing mining settlement of Auraria, and on the site of the existing townsite of St. Charles. Larimer named the town site Denver City to curry favor with Kansas Territorial Governor James W. Denver. Larimer hoped that the town's name would help make it the county seat of Arapaho County, but unknown to him Governor Denver had already resigned from office.