The town was named by Drue Bailey after his cousin Mike Julian, who later was elected San Diego County Assessor.

The area was seasonally occupied by the Kumeyaay people, and in 1845 was part of the Rancho Cuyamaca Mexican land grant.

After the American Civil War, Julian experienced a gold rush. In 1869, A.E. "Fred" Coleman, a former slave, was crossing over what is now known as Coleman Creek, just west of Julian. Seeing a glint of gold in the stream bed, he climbed down from his horse to investigate. Having had previous experience in the gold fields, he retrieved his frying pan and began panning the sands of the creek. Learning of the find, others tried to trace the gold to its source. On February 22, 1870, the first "lode", or hard rock, mining claim was filed in the Julian area. Since February 22 was President George Washington's birthday, the mine was named the Washington mine. Soon hundreds of anxious men and families were rushing to Julian to stake their claims. Julian became a tent city overnight. In April 1870, the area's first saw mill was set up and Julian began to take on a more permanent structure.

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