Dillon was laid out by civil engineers of the Florence Railroad Company following a plan by local physician John H. David, and the General Assembly incorporated the town on December 22, 1888, with boundaries extending in a half-mile radius from the railroad depot. Duncan McLaurin was the town’s first mayor and postmaster. A freight station was constructed in 1893, and the present passenger depot was built in 1904. The Florence Railroad Company was chartered in 1882 and authorized to build and operate a line east of Florence northward to the state border. Right-of-way problems were resolved when J. W. Dillon and his son Thomas offered a half-interest in 63 acres if the railroad would use the land, build a depot, and lay out a town. The offer was accepted, and the railroad from Pee Dee to the state line opened in 1888.