Baxter County was created by the 19th Arkansas General Assembly on March 24, 1873, from parts of Fulton, Izard, Marion, and Searcy counties. It was named for Elisha Baxter, who was governor of Arkansas at the time. The small community of Mountain Home was named temporary county seat; and was later named permanent county seat.
In 1945, Baxter County voted to take the county "dry"—liquor sales prohibited—in 1945 by a vote of 548 to 432. The liquor sales prohibition was overturned in 1978 in the heaviest voter turnout in county history to that date, with 6,175 for the manufacture and sale of intoxicating liquors and 5,991 against. A narrow margin of 184 votes took the county "wet".