A group of prospectors from Oregon are credited with discovering the rich placers here along the Mokelumne River. It happened in October of 1848, a little way below the town’s present site, and the diggings were rich; so rich that even with their provisions almost gone, the men chose to risk starvation rather than abandon their claim to make the long trip to Stockton for supplies. A man named Syree was finally persuaded to go and when he returned, he set up a trading post atop a hill near the scene of operations. In a canvas tent he sold food, tools, and supplies at a price that more than made up for any mining he had missed.

Most of the early mining in the area took place at Big Bar, the spot located by the Oregonians, and as word of the diggings spread through the mines, more and more miners began arriving and soon the land was covered with their tents and various shelters. Among the first to arrive were those already in the vicinity; the French trappers from the Hudson’s Bay Company, Mexican and American settlers from the central valley, and ex-soldiers from Stevenson’s Regiment, mustered out of service and looking for gold. One of Stevenson’s men, Samuel W. Pearsall, discovered the first gold found in Mokelumne Hill, on the north side of Stockton Hill.

Pearsall’s find marked the beginning of the end of Big Bar, as most of the miners left their claims to give the Mok Hill mines a try. And they were not disappointed. The ground around Mokelumne Hill was so rich that the miners were allowed only sixteen feet square for a claim, many of which are reported to have yielded as high as $20,000. While hunting frogs for his breakfast in a prospect hole one morning, a Frenchman spotted a speck of gold. Using his pocketknife, he dug out a nugget which he sold for $2,150. With these kind of prospects, The Hill drew gold-seekers from all over the world. The mixed population is said to have reached near ten thousand souls during the big rush, although that number has undoubtedly been exaggerated over the years. Included were Americans, Frenchmen, Germans, Spaniards, Chileans, Mexicans, Chinese and many other nationalities.

The town took its name from the Mokelumne River, which was named after a Mi-wok Indian village located on the valley portion of the river. The Indians were most likely known as the Mokels, as the Mi-wok suffix umne means “people of.” Father Narciso Duran, the president of the missions in California, was the first to record the name in writing. He spelled it “Muquelemnes,” in April of 1817. During the Gold Rush; however, the name was spelled in a number of phonetic ways: Mokellemos, Moquelemes, Moquelumne, Mokelemy, and no doubt many others.

The ethnic diversity of Mokelumne Hill often led to difficulties between the miners, and in 1849 the so-called "Chilean War" took place, due to differences in customs. A Chilean by the name of Dr. Concha was in the practice of taking up additional mining claims in the names of his peon workers. As the claims were limited to sixteen feet square and one per man, the American miners resent his method of acquiring extra claims. Accusing him of mistreating his workers and using slave labor, the Americans drove Concha off his claim and then commenced working it themselves. Not one to give up easily, Concha then organized his own forces and proceeded to drive out the Americans. Blood was shed during the encounter, resulting in a diplomatic incident between the United States and Chile. The situation was finally settled, in favor of the Americans, and the "Chilean War" was ended.

By 1850, Mokelumne Hill was one of the largest communities in the region. Major strikes were discovered on each of the four hills that surrounded the camp; French Hill named for the “French War” which occurred there in 1851, Stockton Hill was so-called because several trails passed over it on their way to Stockton, Negro Hill where gold was discovered by a black man in 1851, and Sport Hill where the race track was located. The gold and the easy pickings brought in a bad element, and the town became a wild and wicked place during its early years. Racial abuse was common, as was violence. Robberies and killings were a commonplace event. Joaquin Murieta, the bandit, was reputed to frequent the gambling dens.

The year 1851 was an especially bad year. Thompson and West’s History of Amador County reports: “Death by violence seems to be the rule. For seventeen successive weeks.....a man was killed between Saturday night and Sunday morning. Five men were once killed within a week.” Things became so desperate that a vigilance committee was formed. Gongs would sound in the streets when serious trouble occurred, calling the committee to arms. One man was caught for stealing and sentenced to be hanged. Before the sentence was carried out, he confessed to eight murders between Mokelumne Hill and Sonora. Several other criminals were caught and punished, some were run out of town, and the committee disbanded in 1852.

Mokelumne Hill served as the Calaveras County seat from 1852 to 1866. The population continued to grow, the mines continued to pay, and the town continued to prosper. Along with the usual businesses and organizations of the time, Mok Hill also boasted a race track, skating rink, rock quarry, and a good-sized brewery. A large Chinatown was located on the outskirts of town, with estimates of its population ranging from three hundred to two thousand. The Chinese lived in flimsy wood homes that were built close together, which created a constant threat of fire.

Three devastating fires swept through Mokelumne Hill, each one nearly obliterating the town. The first occurred on a Sunday morning, August 24 of 1854. Breaking out in Levenson’s Store, a canvas covered structure on Center Street, the fire consumed everything in its path except two stone buildings which were able to withstand the flames. Losses were estimated at over $500,000. After this fire, many of the buildings that were rebuilt were made from a light brown stone known as rhyolite tuff, a material common to much of the Gold Country. The town’s second great fire took place on February 26 of 1865, originating on the second floor of the Union Hotel. The third major fire occurred on September 4 of 1874, in which practically all of the business section of town was destroyed, along with many surrounding homes.

The gold began to give out in the 1860’s—it always does sometime—and the town’s population drifted away. When the county seat was lost to neighboring San Andreas, the decline quickened and the town faded even further, never again regaining its Gold Rush size or importance. Scattered about the hills, the main portion of the old town is located off Hwy 49, bypassed but worth not passing by. Numerous early buildings still stand as reminders of the town’s past, including the Calaveras County Courthouse and one of the first three-story buildings in the Gold Country.