When the Central Pacific Railroad decided to build its line through the county to connect with the Oregon and California Railroad in Ashland, Montague was chosen to be the next town north of Gazelle. In January of 1887, L.D. Norton was sent to lay out the town site on land that was donated by the Prather Brothers and C.C. Webb, a half section each.
The tracks were completed through Montague on February 8, 1887. As was the tradition of the Pacific Improvement Company, a huge promotional campaign was conducted and an excursion train from Oakland brought up to Montague to auction off lots in the new