In 1863 a treaty was drawn with the local Indian tribes which called for the removal of the Nez Perce from their home country. Over the next 14 years tension grew, fueled by provocative acts of settlers. In 1877 some of the more hot-blooded Nez Perce broke loose, attacked nearby settlements and the area broke into war. U.S. soldiers were defeated in several battles which eventually culminated in Chief Joseph's historic retreat through the growing winter. He led his band of mostly women and children from the Wallowa Valley into Montana to within 50 miles of the Canadian border. The desperate band fled over 1800 miles in 75 days winning three battles, tying one and losing one. He surrendered on October 5th, 1877 saying, "It is cold and we have no blankets."

On October 25th, 1880, while boasting a population of 730, the city of Pendleton was incorporated. The town was named in honor of Senator George H. Pendleton who was vice presidential candidate at the time. City Hall was built at 34 S.E. Dorion in 1908 and housed all city services including Police, Fire and the School District.

The Pendleton Round-Up is held in the second full week in September and draws over 40,000 people to the area each year and is billed as the USA's best rodeo. The celebration was born in 1910 from the desire of a local attorney, Roy Raley, to have a rodeo after harvest. For the night show Raley instituted the Happy Canyon Pageant. The celebration was such a success that the townspeople bought land to house the event. They adopted the slogan, "Let'er buck" and are still buckin' to this day. The celebration includes a parade, old-fashion rodeo events, cowboy breakfasts, country music concert, dancing and art shows. Rodeo fans will enjoy the Round-up Hall of Fame, which is located near the Rodeo Grounds.

The Pendleton Woolen Mills were started by Thomas Kay in 1909 to weave Indian blankets. As a young man Kay had come from England to work in east coast textile mills. In 1863 he headed west to try his hand at wool production and manufacture in the lush, green valleys of Oregon. Kay helped organize Oregon's second woolen mill in Brownsville where he oversaw the weaving operation. He soon opened his own mill in Salem, Oregon and later started the Pendleton Woolen Mills along with his able daughter, her merchant husband, C.P. Bishop, and their three sons, Clarence, Roy and Chauncy.

The Bishop's had an intuitive business sense for quality and style. They studied the color and design techniques of local and southwest Native American tribes and produced a distinctive line of blankets with vivid colors and distinctive patterns. Trade expanded from the nearby Nez Perce nation to the Navajo, Hopi and Zuni nations. The blankets were used as both trading credit and clothing for the tribes, they also became prized for ceremonial use.