Dayton is at the western end of the Twenty-Six Mile Desert at a bend in the Carson River. Immigrants stopping there for water would consider whether to follow the river south or continue west, giving the location its first name, Ponderers Rest. In 1849, Abner Blackburn, while heading for California, discovered a gold nugget in nearby Gold Creek, one of the tributaries of the Carson River.

By 1850, placer miners settled at the mouth of Gold Canyon, working sand bars deposited over the millennia along the path of the creek. Because many Chinese immigrants eventually lived there, some called the community "Chinatown," but it also went by several other names. In 1861, the town officially adopted the name Dayton, after John Day, a local surveyor.

Throughout the 1850s, Dayton served as the commercial hub for miners working in the canyon. With the 1859 discovery of the Comstock Lode, newly-founded Gold Hill and Virginia City, six miles to the north, assumed prominence. Dayton prospered by milling ore, using water from the Carson River.

In 1861, Dayton became the governmental seat for Lyon County. Its 1864 courthouse was one of the first in Nevada. The 1869 opening of the Virginia & Truckee Railroad shifted ore processing upstream to Brunswick Canyon, but Dayton continued to serve as a center of commerce and government.

During the 1860s, the community's population eventually surpassed one hundred and finally reached a peak of nearly 600 in 1910. In 1909, fire destroyed the Lyon County Courthouse. Residents of the growing agricultural community of Yerington to the south called for a shift of the Lyon County seat. This occurred in 1911, leaving Dayton with a shrinking economy and population. By the 1920s, the Lincoln Highway was bringing some tourists to Dayton, but the town remained a quiet reminder of a time when Nevada's gold and silver strikes captured national attention.

In 1961, Dayton won fame as a setting for John Huston's film, The Misfits, the last movie appearances of Clark Gable and Marilyn Monroe. Beginning in the 1990s, Dayton experienced phenomenal growth as residential development expanded on the east side of the Carson River. The historic part of Dayton is within the Comstock Historic District, featuring a small but impressive main street, the monumental Odeon Hall, and a fine local museum located in an 1865 schoolhouse.

Dayton claims the designation of Nevada's oldest settlement, a title disputed by the residents of Genoa. Miners residing at the mouth of Gold Canyon noted Colonel Reese and his party passing along the Carson River as they headed for the Sierra foothills to establish Mormon Station, later called Genoa. Today's residents of Genoa point to the region's first post office and several other attributes of stability, correctly noting that their community deserves the title of "Nevada's first town." Nevertheless, Dayton had a continuous population from an earlier date. It may have been dirtier and less organized, but Dayton probably warrants the designation of "Nevada's first settlement."