Not long after the settlement was formed, in walked a man named Henry Plummer. Handsome, well dressed and charismatic, he gained the trust of the area miners and was soon elected sheriff of the burgeoning community. However, little did the unsuspecting citizens of Bannack know, but their new sheriff led a secret band of road agents called the "Innocents", who began to terrorize the travelers between Bannack and Virginia City, robbing and killing more than 100 men over the next several months.

In December 1863 the miners formed the Montana Vigilantes and during the next forty two days, the Vigilantes hanged 24 of the gang members, including Henry Plummer. Later, historians questioned the authenticity of the outlaw tale, suggesting that the whole story was only a cover for the ruthless vigilantes themselves. Today, many say that the ghost of Henry Plummer haunts this old settlement, which has long since become a ghost town. Perhaps he wants to avenge his name.

At the Hotel Meade, which was originally built as a courthouse in 1875, there are numerous stories of ghostly activity. When Bannack lost its county seat status to nearby Dillon in 1881, the building sat vacant until 1890 when it was remodeled into a plush hotel. The hotel opened and closed sporadically through the years with the increase and decreases in mining activity. At times the building acted in the capacity of a hospital.

Cold spots, the apparition of a teen-age girl, and sounds of crying children are often reported by those who visit this old building. The first sighting of the young girl was well over a hundred years ago. The teen is said to be that of a girl named Dorothy Dunn who drowned in a dredge pond along the creek long ago. Shortly after her death, she made her first appearance to her best friend, Dorothy Dunn, who was with her at the time of her death. Dorothy was in the second story of the Hotel Meade, where her mother worked as a manager.