Named for John B. Felton, a former Oakland, California mayor, a judge and a San Francisco Bay Area investor in his day, the town is a historic logging community. Felton served as the lower terminus of the San Lorenzo Valley Logging Flume from Boulder Creek, which began construction in 1874 and when formally opened in October 1875 was augmented by a new rail line to transport logs to the wharf in Santa Cruz.
Shortly after the Santa Cruz & Felton Railroad began operation, a second rail line began operation in 1880 from Alameda, California and San Jose, California. A new depot was constructed at "New Felton" using salvaged materials from a dismantled portion of the San Lorenzo Valley Logging Flume from Boulder Creek. The railroads, limekilns and forest in this area provided a majority of the repair materials for the great 1906 San Francisco earthquake. The standard gauge railroad line came into Felton by 1909.
In 1927, the Felton community of Lompico, California, was established.
In 1963, the steam-powered Roaring Camp Railroad began tourist operations on the Big Trees Ranch out of the Old Felton Depot. The company later constructed a replica logging camp and another depot further down the property, and in 1985, took over operations on the old SPC/Southern Pacific standard gauge line to Santa Cruz. Roaring Camp is a re-creation of an 1880s logging camp and home to the original South Pacific Coast (later Southern Pacific) Felton depot and freight shed, as well as two unique railroads — the Roaring Camp and Big Trees Narrow Gauge Railroad, a steam-powered line up Bear Mountain, and the Santa Cruz, Big Trees and Pacific Railway.
Felton is home to the Felton Covered Bridge, an 80-foot-long covered bridge over the San Lorenzo River built in 1892 and placed on the National Register of Historic Places in 1973.