It was early in the 20th century when the first European settlers arrived in the Drayton Valley area. They made their living either as lumbermen or trappers, making use of the resources in the undeveloped district. No road connection existed with Edmonton, and the North Saskatchewan River was their only link with the outside world. The first town site was in the river valley, but it was later moved up the hill to its current location.
The economic base during the early period was lumber. After 1945, however, mixed farming became the main source of income. In 1953, all that changed when oil was found close to the hamlet.
The discovery well of the Pembina Oil Field was drilled by Mobil Oil and was spudded on February 23rd, 1953. The oil field proved the largest in North America and its impact was immediate. Other oil companies intensified their drilling in the locality. Over $900 million was invested in the area by the oil industry. Within a year, the boom was on. More than 70 oil companies set up their field-based operations in Drayton Valley.
Before the boom two churches, a post office and a two-classroom school were the focus of the community—with the arrival of the oil boom, these facilities were outgrown overnight.
In one year (1953), the town grew from 75 to 2,000 people. The hamlet continued to grow, and was incorporated as a village in February 1956. Two other communities also grew out of the influx of workers—Lodgepole and Cynthia. Drayton Valley was the main service and residential centre, and on February 1st, 1957, Drayton Valley was officially incorporated as a town.