Kershaw, originally Welsh's Station, was founded in 1888 when Capt. James V. Welsh (1845-1906) persuaded the Charleston, Cincinnati, & Chicago Railroad to build a depot halfway between Camden and Lancaster, on what was then the county line between Kershaw and Lancaster Counties. The town was incorporated later that year and renamed in honor of Maj. Gen. Joseph B. Kershaw (1822-1894), prominent Confederate general and state senator from Camden.
Kershaw, with a population of 500 by 1890, grew even more dramatically after an 1897 fire which destroyed most of the downtown. By 1900 a guide to Lancaster County called it "a pretty and prosperous town of about fifteen hundred inhabitants." Among the most significant early businesses here were the Kershaw Oil Mill (1902) and the Kershaw Cotton Mill (1912). The Benton Hotel on S. Cleveland St. was well known and frequently hosted tourists visiting the nearby Haile Gold Mine.