Dunbar was founded in 1856 by John Dunbar on the intersection of the properties of John Dunbar, T. H. Dunbar, J. Wilson, and John McGinley. It was originally known as Wilson until 1856 when it was renamed for the oldest resident and recognized founder. Dunbar was a large freighting depot for goods traveling west out of Nebraska City. The first railroad was built in Dunbar in 1869 when the Midland Pacific Railway and Burlington and Missouri River Railroads reached Nebraska City. By the 1880s, the town contained a grocery, general store, restaurant, boarding house, two hotels, two liveries, five churches, pharmacy, lumberyard, two banks, barbershop, two saloons, dentist, optometrist. In 1884 and 1888 two fires occurred, prompting the usage of brick and mortar.