Twenty nine people in 1835 obtained from the Mexican government a land grant in order to establish "Nuestra Senora de los Dolores de Las Vegas" or "Our Lady of Sorrows of the Meadows".
The Gallinas River provided a fertile valley for agriculture and critical water for irrigating crops.
Las Vegas was founded and soon overtook San Miguel del Vado to the south as the main stopping place for the many traders heading west on the Santa Fe Trail. Economic parternships were formed between the Mexican government officials and the American merchants so wagons full of goods could be traded in "los estados" and American goods could be sold to Nuevo Mexicanos.
When the caravans arrived in the Las Vegas plaza,
Church bells rang and carts of the townspeople were set up in the plaza to supply the traders with food, wood, and other goods. It was a sort of farmer's market.
When war was declared in 1846 with Mexico, Las Vegas was the first New Mexican town marched upon by the Army of the West, led by General Stephen Kearny. He told the inhabitants from atop one of the adobe houses in the plaza that he did not come as a conqueror or expect them to take up arms against their own people, but that whoever took up arms against him, would be hung.
After the war, stores began to be built where houses had stood. One of the early merchants was Don Miguel Romero y Baca who moved to Las Vegas in 1851 with his five sons. They would become political leaders of the area.
In 1851, Fort Union was established for the protection of the wagon caravans. Because of its presense, towns along the trail were allowed to prosper many supplying the fort with food. Five mills were built in the Mora valley for this purpose.
Beef and timber were also sold to the fort which enriched the towns of Las Vegas, San Miguel, Mora, and La Junta (which is now Watrous). A pioneer in the grain industry of the valley was Col. Ceran St. Vrain who had also been associated with Bent's Fort. His stone mill still stands in Mora.
By the 1860's Las Vegas was the leading commercial center for New Mexico and home to merchants of many nationalities including German Jews and French Canadians.
Textiles, furniture, whiskey, metal tools, and tobacco could be bought cheaper from the US than from Mexico and sold in the merchant establishments of Las Vegas.
The Atchison, Topeka & Santa Fe Railroad reached Las Vegas in 1879 and a new town was constructed east of the Gallinas River. Railroad Avenue and Douglas Street became home to Victorian mansions and later the Carnegie Library. The old town area remained around the Plaza.
By 1890, Fort Union was closed by the War Department in its goal to abandon all frontier posts.
The town in its heyday had the reputation of a "wild west" town. In 1876, a windmill was erected in the Plaza which was used for a brief time as a gallows. Such famous characters as Doc Holliday and Billy the Kid visited the town.
But in 1880, this symbol of vigilante justice was replaced by a bandstand in the middle of the Plaza.