Prospector Charles E. Kennedy located and staked claims on two rich gold veins in Cinnabar Canyon (now Kennedy Canyon) in June 1891. Word of the discovery spread slowly, and only a few dozen people arrived in the new Kennedy district in the first several months. Its growth was spurred following the construction of William Jenkins' mill at the end of 1893. Early the next year, the population soared to roughly 500 and a school was opened. In summer, the Imperial Gold Mining Company built another twenty-stamp mill using equipment from Dun Glen's Auburn mill, and Kennedy prospered. Freight lines ran to Winnemucca and Lovelock, and for a time the Nevada Central Railway considered adding a branch to the town. Unfortunately despite this surface prosperity, both mills were plagued by sulphides that they were not equipped to handle, making ore unrecoverable. The Imperial Mill closed in December 1894, followed by the Jenkins Mill the next year, and Kennedy languished (though never completely died).

After the turn of the century, Nevada mining experienced a resurgence following the booms at Tonopah and Goldfield, and Kennedy had its share of new arrivals. In mid-1901, the Imperial Mill was sold to the Wynn Lasher Syndicate, which quickly began overhauling it and adding a cyanide leaching plant; it began operation in July 1902. It operated successfully into 1903, but closed by 1905. Kennedy once again declined, but as before was not completely deserted. Limited mining continued into the 1940s, before finally coming to a close due to World War II. Kennedy finally became a ghost thereafter.