This area was the intersection of several important early trails. The trail from Pilot Grove to the Cedar Falls crossing came through Cedar City, and from here, a trail led north to the Janesville river crossing, Waverly and Charles City.

Paul Somoneaux, a French trapper and trader, explored the Cedar City area prior to white settlement. He disappeared for several years, but returned in 1847 and built a cabin here. He is also buried here, though the exact gravesite is unknown.

Cedar City emerged in the 1850s as a convenient stopover for teamsters hauling supplies from Dubuque to the frontier settlements. The community came to include two inns, a general store and a brewery. A plat of the town was filed with the county in 1856.

When the railroad came through in 1864, there was no longer any need for the teamsters who were the mainstay of Cedar City. The inns and the store closed and the town slowly disappeared. Despite its tough mule skinning peat, Cedar City is now a rather peaceful part of modern Cedar Falls.