The town of Oelwein was laid out in a corn field purchased from Gustav Oelwein on the coming of the Burlington, Cedar Rapids and Minnesota Railroad (later called the Rock Island) in 1872. Some years later the two dividing streets of Oelwein were named after his sons, Frederick and Charles.
The town of Oelwein is named after the Oelwein family, but they were not the original settlers of the land. On the contrary, it was entered by a professional man at Dubuque, who made it his business to enter land, add a good fee for his trouble, plus a high rate of interest, and then not turn it over to the man in whose name it was registered until he was able to pay the price. Oelwein’s present site was entered in 1852 by J. B. Burch. The hamlet of Oelwein was instituted in 1873, and was incorporated as a town in 1888, with Dr. Loban Pattison becoming its first mayor. The town suffered its chief setback in 1887, when nearly the entire old Main Street business district (now First Avenue SE) was destroyed by fire. In 1890 the census gave the population as 830.