Greenwood County, in which Fall River Lake is located, was first laid out in 1855-'56, but remained an unorganized territory for a number of years. The first settlement of the area took place in 1856 by settlers from Mississippi who wanted the area to be pro-slavery. The same year, antislavery settlers began to immigrate in small numbers. However, significant settlement did not begin until the following year.

Because of the divided sentiments of the settlers, the area was the scene of unrest and violence during the Civil War. In 1861, a rough fort was established at Eureka by Captain L. Bemis of the Home Guard. The fort was named for Colonel James Montgomery of the Tenth Infantry and occupied during the entire war by Captain Bemis and his command. At the close of the war, settlement of the area increased rapidly, and new towns such as Eureka, Madison and Severy began to be incorporated.