Originally the road from Franklin to Walhalla was little more than a mountain trail, leading through the mountains where the Town of Highlands is how situated. In 1872, when S. F. Kelsey and Charles Hutchinson of Kansas, bought 800 acres on the west plateau of Satulah mountain the Franklin-Walhalla road was the only exit from the wild plateau. Few travelers, other than occasional horseback riders, passed through the primeval forests of this highland country.

A legend related in a history of Macon county has it that Kelsey and Hutchinson had taken a map of the United States and on it had drawn two lines, one running from New York to New Orleans, the other from Chicago to Savannah or Charleston - working on the theory that the point of intersection of these lines would be the exact center of population between the great population centers of the east - they set out to locate the spot. They came to Franklin, and then on to the present sight of Highlands.‍
That Mr. Kelsey thoroughly believed in the theory he and his partner are said to have advanced is evidenced by the statement he once made to J. Jay Smith, who had lived in Highlands longer than any other living inhabitant of the town. Mr. Kelsey said: "Smith, Highlands is like the hub of a wheel. People will eventually come through Highlands to reach every point in this part of North Carolina, in northwestern South Carolina, and points in North Georgia."

What evolved was a health and summer resort at more than 4,000 feet on the highest crest of the Western North Carolina plateau in the Southern Appalachian Mountains. This paradisiac settlement, the highest incorporated town east of the Rockies, provided common ground for both northern and southern pioneers a decade after the Civil war.

By 1883, nearly 300 immigrants from the eastern states were calling Highlands home. In the early 1880’s the town contained 8 country stores specializing in groceries, hardware, and general merchandise, a post office, a hotel and boarding house for summer guests, a public library, four churches, and a first class school.

Very little changed until the late 1920’s, when the Cullasaja River was dammed, forming Lake Sequoyah, to provide hydroelectric power. A spectacularly scenic road to Franklin was carved into the rock walls of the Cullasaja Gorge. The muddy roads in and out of town were reinforced with crushed stone.

In the mid-1970’s an the influx of multi-family homes and shopping centers spawned land use plans and zoning laws intended to protect Highlands’ natural assets. The town’s population stands at slightly over 1,100 year round residents with 3,200 on the plateau.