In 1866, settler Seaborn Hall, Jr., a farmer with extensive land holdings, opened a general store in the area that is now Graham. Several years later, when rail workers completed the lines through the county, another farmer and large landowner, Middleton Graham, donated the land for station Number 8. As a note of appreciation, residents named the city in Graham's honor.
Graham prospered in the late 19th and early 20th centuries, largely because of its successful naval stores and timber industry. In nearby Pine Grove, Van Bokkelyn's turpentine still processed the gum and rosin that shipped out of Graham by rail.
When it incorporated locally in 1897, Graham had five stores, a post office, an express office, a turpentine still, and a cotton gin. In 1991, Graham earned its official charter from the state legislature.