The Chisholm Trail passed to the east of Duncan prior to the town's founding. An estimated 9,800,000 Longhorn cattle were herded up the trail between Texas and Abilene, Kansas during its existence. After learning that an extension of the Chicago, Rock Island and Pacific Railroad was being built from Kansas to Texas, Scotsman William Duncan brought his wife, parents, and other relatives and created a trading post situated at the intersection of the north-south Chisholm Trail and the east-west military passage between Fort Arbuckle and Fort Sill. The first train arrived on June 27, 1892; that date is considered the official birthdate of the town.
Many of the city's first buildings were woodframe, but were replaced by sandstone and brick structures after natural disasters destroyed them. Four fires in 1901 burned down several buildings.
Centrally located in Stephens County, Duncan became the county seat after Oklahoma achieved statehood in 1907. As a compromise between residents of the northern and southern parts of the county, the county courthouse was located in the middle of Duncan's Main Street, half of it in the northern part of the city and county and half in the southern. Main Street made a wide circle around it on both ends.
Oil wells opened in Stephens County in 1918 and led to rapid development in Duncan. Shacks were prohibited immediately following the opening of the wells and other regulations were also put in place to channel the growth in an organized manner.
Several Tudor Revival style homes were built in the 1930s. Works Progress Administration projects meant to rebuild the economy after the Great Depression resulted in a public library, a senior high school, a stadium, a pool, a school and auditorium for the black community, an armory, and numerous bridges and sidewalks.