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Jefferson County was created on December 12, 1914, from a portion of Crook County. The county owes much of its agricultural prosperity to the railroad, which links Madras with the Columbia River, and was completed in 1911, and to the development of irrigation projects in the late 1930s. The railroad was completed despite constant feuds and battles between two lines working on opposite sides of the Deschutes River.
Madras was incorporated in 1911, and has been the permanent county seat since a general election in 1916. The first (temporary) county seat was Culver, which was selected by a three-man commission appointed by the governor. Due to repeated tie votes over several days (with one vote each cast for Culver, Metolius and Madras). The deadlock was eventually broken by allowing the Metolius Commissioner to post the tie-breaker, by voting for Culver.
Rapid development in adjacent Deschutes County during the 1990s had farmers in Jefferson County concerned that they might be priced out of their own farmlands, which could be replaced by destination resorts, golf courses and other amenities for recent arrivals.
The county is named for Thomas Jefferson, 3rd President of the United States.