In 1735, the colonial government of King George II established eleven townships in backcountry South Carolina, to encourage settlement, and to provide a buffer between Native American tribes to the West and colonial plantations in the Lowcountry. The townships included one named Saxe Gotha, which flourished with major crops of corn, wheat, tobacco, hemp, and flax, as well as beeswax and livestock.

The Battle of Tarrar Springs was fought nearby on November 16, 1781. In 1785, Saxe Gotha was replaced with Lexington County, in commemoration of the Battles of Lexington and Concord in Massachusetts. The county's first courthouse was built in Granby, but chronic flooding forced the courthouse to move in 1820 to its present location, establishing the community of Lexington Courthouse. The community was incorporated as the Town of Lexington in 1861.

In 1865 Union Army forces destroyed the courthouse and many buildings in the town. But local farms and the lumber industry helped stabilize the economy after Reconstruction. The town grew due to the Columbia to Augusta Railroad and the Lexington Textile Mill, constructed in 1890.

Many current brick buildings were built in the aftermath of severe fires in 1894 and 1916.