In April 1903, the Town of Cottonwood was incorporated, making it the first town established in Houston County. The town's name may have come from either Mr. Wood, an influential land owner, or from the softwood trees growing in the area. General stores, a bank, mills (turpentine, grist, timber, etc.) sprang up. At least two lumber companies constructed logging railroads through the town. One remained in service into the 1940s as a freight service from the Cowarts area to Bascom, FL. The early 1920s saw an interest in drilling for crude oil in the area. Several attempts would find only a hot mineral water spring. Mr. J. R. Sealy capitalized on this find and established an internationally known health spa. The Sealy Hot Mineral Springs remained in business until fire destroyed it in 2001. At the 2000 census, the population of Cottonwood was 1,170.