Arthur County was established in 1913 from the western part of McPherson County following an effort to move the McPherson County seat from Tryon to the more centrally located Flats: rather than lose the county seat, the residents of Tryon, Nebraska agreed to have the county divided approximately in half, according to boundaries for sandhills counties originally proposed in 1887. The half which became Arthur County had been in the process of settlement by 1884, by ranchers seeking open grazing land. The placement of a post office at Lena in 1894 and the passage of the homesteading act in 1904 (which allowed claims of 640 acres compared to the previous 160 acres in this area) further influenced the county's founding and expedited the new county's establishment processes.