In 1861, one Jacob Marklee took up a 160 acre claim and built a bridge and toll station on the banks of a stream crossing the road from Genoa, Nevada ten miles north of Silver Mountain City. Killed in a gunfight in 1863, Marklee would give his name to the future County seat, Markleeville, and creek of the same name.

Bolstered by the much ballyhooed silver boom, and fed by local politicians, Alpine County was created in 1864 from parts of adjacent counties, while the population had grown to more than 11,000. Miners also left the rich gold fields of Bodie only 80 miles away. Silver Mountain was the first County Seat of Alpine County. The excitement was short-lived. As the Silver Mountain ore proved too stubborn to recover at a profit, men began to leave the area, and by 1868, Alpine County had fewer than 1200 people. The finishing blow came with the demonitization of silver in 1873, collapsing prices and closing the remaining mines.

Markleeville stood ready to succeed its neighbor as County seat, which was accomplished in 1875. Despite its own loss of population, the town had begun to develop into a trade center for the ranching and lumber business, which were still supplying the booming Comstock Lode mines. In 1885, Markleeville suffered a terrible fire, but the town was quickly rebuilt. Several buildings, including the Fisk Hotel (formerly the Alpine Hotel) now the Wolfcreek Restaurant and the log jail were moved from Silver Mountain, though with a reduced population, many lots remained vacant.

Through the rest of the 19th century, Markleeville continued its role as the supply and shipping center for local ranchers and farmers.