Lost Springs was first inhabited in the 1880s, when it received its name from railroad workers who could not find the springs shown on survey maps of the area. The town was incorporated in 1911, and it originally had 200 residents, most of whom worked at the nearby Rosin coal mine. After the coal mine closed around 1930, the population of Lost Springs steadily declined.By 1960, the population of the town had dropped to five. In 1976, both the state of Wyoming and the U.S. Bicentennial Commission designated Lost Springs as the smallest incorporated town in America; its population was then eleven.In 1983, Lost Springs became involved in a court battle with the Chicago and North Western Transportation Company. The railroad, which ran adjacent to the town, attempted to seize 5.2 acres (2.1 ha) of land to build a 22-foot (6.7 m) railway embankment. Lost Springs Mayor Leda Price alleged that the embankment, which would lie between the town and U.S. Highways 18 and 20, would separate the town from traffic on the highway. A Wyoming district judge ruled in the town's favor, and the railroad ultimately agreed to build an unobstructing track bed and use its own land for track.