Before the city of Cabot existed, an 1862 typhoid epidemic took the lives of about 1500 Confederate soldiers previously under Allison Nelson who were camped in the hills surrounding Cabot and nearby Austin, Arkansas. Four hundred twenty-eight poorly marked graves were exhumed in 1905 by a group of Confederate veterans and moved to a new site at Camp Nelson Confederate Cemetery located in Cabot on Rye Drive, just off Cherry Road between Campground and Mount Carmel Roads. Marble gravestones were placed over each grave and a large marble obelisk was erected to honor the dead. In 1982, a group of volunteers from Cabot began maintaining the cemetery, which had fallen into disrepair.
The city of Cabot began as a small settlement at a refueling station on the Cairo & Fulton Railroad. The settlement first appeared in 1873 and is thought to have been named after a railroad surveyor. First Baptist Church was established in 1876 and the Bank of Cabot (later merged into Centennial Bank) was founded in 1903. The city of Cabot was officially incorporated November 9, 1891 as the 139th city in Arkansas.
Cabot was often overshadowed in northern Lonoke County by the much larger city of Austin (originally named Oakland), which was briefly considered for the state capital. However, Cabot experienced growth during the 1950s and 1960s, due to its proximity to the Little Rock Air Force Base in nearby Jacksonville which opened in 1955.
Major transportation routes near/through Cabot are the railroad (currently owned by Union Pacific), the "old highway to St. Louis" (currently Arkansas Highway 367), US Highway 67/167, and Interstate 40. Historically, Cabot lay on the Memphis to Fort Smith spur of the Butterfield Overland Stagecoach Route.
A devastating tornado hit downtown Cabot during the afternoon of March 29, 1976, killing five people and destroying multiple buildings. During the rebuilding of the city, it was decided to build a new city hall, municipal courtroom, library (since relocated), and police station on the site of the debris-filled dividing point between the east and west sections of Main Street, creating City Plaza. Highway 89, which follows the same path as West Main Street in Cabot, was redirected around City Plaza along one block of Second Street, to continue its path along Pine Street just south of the Cabot High School campus.
Cabot has experienced phenomenal population growth from the 1980s to today. New housing starts, as seen by new subdivided developments, now cover the town. One reason for such growth was the aforementioned Air Force base, while another is the top-rated school district.
On August 10, 2006, Cabot Junior High School North experienced a devastating fire which was believed to have started as a small electrical fire in the library caused by a faulty light bulb. Although there were 100 people in the building at the time, there were no injuries. The building burned from 2:30 p.m. to about 9:00 p.m., and the structure was a total loss. Cabot Fire and Police Departments say that this is one of the worst structure fires to have ever occurred in Cabot. The school was only about eight years old. It was rebuilt and reopened about three years later.