The site was first called Strobridge after James H. Strobridge, president of the transcontinental railroad construction company. The site was originally planned to be the midway point where the rail building efforts from San Antonio and El Paso would join. However, work fell behind in the canyon country east of present-day Sanderson and the silver spike was driven far to the east near Shumla, Texas.

One of the first to settle in the area was a man named Charlie Wilson, who established a saloon near the site of the proposed railroad terminal. Calling it the Cottage Bar Saloon, Wilson also bought all of the land which would later become the Sanderson townsite. In these earliest days, he also had a competitor – none other than Roy Bean, who also hoped to capitalize on the incoming railroad crews. However, when Bean opened another saloon, Wilson spiked his whiskey with "coal oil" and Bean soon moved eastward to Vinegarroon and Langtry. Wilson's riddance of his competitor would later earn Sanderson the name, "Town Too Mean for Bean."

As the sole land owner, other than the railroad, Wilson, who was affectionately called “Uncle Charlie,” quickly made work in developing the town. Not only did he initially own the only saloon, but also became the first real estate developer, selling lots to prospective businesses and home owners. He would also become known as a community philanthropist, giving money and land to many good causes in the community.

In 1882, when a roundhouse was built, the site's name was changed to Sanderson, after Joseph P. Sanderson, the engineer in charge of construction. The depot of the Galveston, Harrisburg, & San Antonio Railroad was one of the first buildings constructed in the fall of 1882. Built to the Southern Pacific Railroad standards, it was similar to other depots located in many of the western states. It was originally about 130 feet long with equal extensions on either side of the central 2-story depot master’s residence. The east end contained a lunch room, locally known as the “Beanery” and the west end contained a freight warehouse. The railroad would eventually employ hundreds of workers and include 13 tracks in Sanderson. Along with the railroad, the local cattle and sheep ranchers grew as Sanderson became a large shipping point. In 1883, the fledgling community gained a post office. In its earliest days, it was like many other frontier towns – unruly with its many railroad workers and cowboys.