Settlers first came to the present-day Berthoud area in the early 1860's, following the Colorado Gold Rush. Many settlers filed homestead claims, but most bellied up and left the valley to hardier souls who ranched and farmed the arid prairie that straddled the river bottom.
In 1872, a miner-turned-rancher from Central City, Colorado, Lewis Cross, staked the first homestead claim where the Colorado Central Railroad planned to cross Little Thompson creek. When the tracks were laid through the valley in 1877 a depot, section house, and water tank were installed at this strategic site. The tiny settlement known as Little Thompson was renamed Berthoud in honor of Edward L. Berthoud, who had surveyed the rail route through the valley.
Over the next few years the settlement grew to include a handful of homes, a blacksmith shop, a mercantile store, a small grain elevator, and a log cabin that served as school and church for the community.
In the early 1880's, the Colorado Central Railroad recognized that Berthoud's location on the river bottom caused their steam-powered locomotives to labor excessively to ascend the grade out of the valley. At their urging, during the winter of 1883-84, the buildings of the town were loaded on skids and pulled by teams of draft animals to the town's present-day location on the bluff one mile (1.6 km) north of the river.
Agriculture in the Berthoud area flourished. Farmers diverted water from the Little and Big Thompson Rivers into a network of reservoirs and ditches that allowed the arid uplands to be irrigated. Harvests of alfalfa, sugar beets, wheat, corn, and barley were sold on the open market or used to fatten pens of sheep and cattle. The town grew as merchants and shopkeepers set up businesses to serve farmers and ranchers from the nearby countryside.
In 1886, the Welch Addition doubled the size of the Berthoud as town boundaries extended south beyond present-day Mountain Avenue for the first time. A year later a hose company was hastily formed to protect the town from fire after the Davis & Hartford Mercantile store burned to the ground. In 1888 a town board was elected and within a short time 
they hired a marshal to keep the peace and light the street lamps. By the early 1900's, Berthoud sported a business district on Third Street and Massachusetts and Mountain Avenues.
In the 1920's Mountain Avenue became part of a paved state highway system which would become U.S. Highway 287 connecting the larger towns of northern Colorado. In 2007, Highway 287 was rerouted to the north and west of Berthoud, bypassing downtown Berthoud and eliminating Mountain Avenue from the highway route.
The Town of Berthoud was incorporated in 1888.