In 1873, Peter Magnus platted the first town and named it Petersburg, which became one of the principal towns south of Denver on the Santa Fe Trail. In 1887, Isaac McBroom laid out a six-block, L-shaped plat and named it Sheridan Junction.
An election for incorporation was held in early 1890 and the town, which included Petersburg and Sheridan Junction, was named Sheridan. In 1959, the status of Sheridan was changed from a town to a statutory city. In 2002, the City adopted a Home Rule Charter