Lancaster, founded in 1798, was first called Lancaster Court House and later known as Lancasterville. The seat of Lancaster District from 1800 to 1868, it has been the seat of Lancaster County since then. The town and county were named for Lancaster, Pennsylvania, the home of the Scots-Irish families who moved to this part of the South Carolina backcountry by the 1750s. Lancaster was the only incorporated town in the county until after the Civil War.
The town grew rapidly as upcountry cotton production increased between 1800 and 1830, but grew more slowly for the next fifty years. Lancaster, revitalized by the arrival of the railroad in the 1880s and the rise of the textile industry in the 1890s, was described as "delightful and flourishing" in 1900. The Lancaster Downtown Historic District, a collection of significant public and commercial buildings, was listed in the National Register of Historic Places in 1984.