In March 1851 Abraham Thompson, a mule train packer, discovered gold near Rocky Gulch while traveling along the Siskiyou Trail from southern Oregon. This discovery sparked the California Gold Rush from California's Sierra Nevada into Northern California. By April 1851, 2,000 miners had arrived in "Thompson's Dry Diggings" to test their luck, and by June 1851, a gold rush "boomtown" of tents, shanties, and a few rough cabins had sprung up. Several name changes occurred until the little city was called Yreka. The name comes from the Shasta /wáik'a/, the name for nearby Mount Shasta. The word means "north mountain" or "white mountain". Mark Twain, in his Autobiography (p. 162, Harper/Perennial Literary, 1990), tells a different story:
Well-known poet Joaquin Miller described Yreka during 1853–1854 as a bustling place with "... a tide of people up and down and across other streets, as strong as if a city on the East Coast". Incorporation proceedings were completed on April 21, 1857.