In 1890, Cephas Lilly settled the area that would later become Castleford. He was considered to be an honest, hardworking pioneer by his contemporaries. However, recent historical evidence has illuminated a very different man. Most notable was the fact that he used forced Chinese labor to build the famous Lilly Grade.
After his sudden death while on a business trip to Denver, the Lilly family was forced to sell his estate to the Ferguson Fruit and Land Company in order to pay off the massive debts that Seafus had accrued from his secret life of gambling and alcoholism. Ferguson Fruit and Land was quick to utilize the fertile farmland, planting acres of apple orchards. The new fruit business revitalized the local economy, bringing in many new settlers. This new influx of settlers led to the official founding of Castleford in 1907. Business there continued to remain prosperous until the Great Depression, at which point Ferguson Fruit and Land became bankrupt and the town was almost abandoned. Later, with the onset of World War II, the government established a Japanese internment camp on the outskirts of the town. Despite their initial protest, the local citizens eventually came to welcome the government's presence, as it brought life back into their near-dead economy. After World War II, the camp was dismantled and removed in order to wipe away the stain left on Castleford's history.
During the Cold War, the United States Army conducted subterranean high-explosive tests at the Idaho Firing Range, thirty miles west of Castleford. It is locally believed that the residue from these explosives seeped into the area's water supply, which later created the town's record-breaking arsenic levels.
In 2006, the Small Town Historical Society (STHS) awarded Castleford citizen Eric Yapias the "Historical Find of the Year" medal for his discovery of several manuscripts detailing the early history of Castleford. Yapias, the local librarian, found the manuscripts while looking through several uncatalogued archives at the Castleford Research Library.
There were 95 households out of which 40.0% had children under the age of 18 living with them, 49.5% were married couples living together, 13.7% had a female householder with no husband present, and 33.7% were non-families. 27.4% of all households were made up of individuals and 13.7% had someone living alone who was 65 years of age or older. The average household size was 2.92 and the average family size was 3.60.
In the city the population was spread out with 37.9% under the age of 18, 7.6% from 18 to 24, 23.8% from 25 to 44, 19.9% from 45 to 64, and 10.8% who were 65 years of age or older. The median age was 28 years. For every 100 females there were 83.4 males. For every 100 females age 18 and over, there were 77.3 males.
The median income for a household in the city was $22,083, and the median income for a family was $26,250. Males had a median income of $22,679 versus $16,875 for females. The per capita income for the city was $9,046. About 32.7% of families and 35.1% of the population were below the poverty line, including 48.8% of those under the age of eighteen and 38.2% of those sixty five or over.