Just a short time later, she met an older man who cared little about her past. Though the girl may have been happy with her suitor, her father was not and soon shot and killed the man.

Afterwards, the 14 year-old ran away from home and traveled to Abilene, Kansas. With few options to support herself, she became a dance hall girl and prostitute. It was in this role that she earned the nickname "Squirrel Tooth Alice,” for two reasons – one the prominent gap in her teeth, and the second, an odd penchant for making pets of prairie dogs, which she kept on a collar and leash. While in Abilene, she met gambler and gunman, William "Texas Billy” Thompson, brother to more famous Ben Thompson.

Before long, the pair became a couple and Libby followed Billy as he worked as a cowboy along the Chisholm Trail and she continued to make money as a dance hall girl in a number of places along the trail.

However, by 1872, they were back in Kansas, this time in Ellsworth, where Billy made his living gambling and Libby continuing to work the saloons. The following year, Libby gave birth to her first child and the two got married.  

In August of 1873, Billy Thompson, in a state of drunkenness, shot and killed Ellsworth town Sheriff Chauncey Whitney. Billy was arrested but soon bailed out and the couple fled back to Texas. However, Texas Rangers caught up with Billy in October, 1876 and he was extradited back to Kansas to stand trial for the killing of Sheriff Whitney. Amazingly, the shooting was ruled an accident and Billy was let go. Later, they wound up in Dodge City, where Libby worked once again as a dancer and prostitute.

After leaving Dodge City, the Thompsons drifted to Colorado briefly but soon made their way back to Texas. In Sweetwater, they finally settled down, purchasing a ranch outside of town and Libby set up a dancehall and brothel in town.

Over the years, Libby had nine children, three of which were said to have been fathered by someone other than Billy. In the meantime, her Sweetwater brothel became prosperous.