The formerly famous Shaniko was originally called Cross Hollow. A post office by that name opened in 1879 with August Scherneckau as postmaster. A few years later in 1887, the Cross Hollow post office closed, then the “Shaniko” post office reopened in 1900.

In the early 1900s, Shaniko served as a transit hub for the Columbia Southern Railway. At the time, the town lay at the center of 20,000 square miles of wool and wheat land. By 1901, Shaniko was Wasco County’s fifth largest city. It had the largest wool warehouse in the state, in which 4 million pounds were stored and sold. It was 1903 when Shaniko gained the nickname “Wool Capital of the World.” That year the town shipped over 1 million bushels of wheat and over 2,000 tons of wool. This amounted to some $3 million in wool sales alone. A year later in 1904, the wool sales were up to $5 million. Shaniko saw conflict in Oregon’s Range Wars, and was one of the rare places where shepherds fended off the cattlemen.

The good times wouldn’t last, however. In 1911, the Oregon-Washington Railroad and Navigation Company opened a route linking Portland to Bend through the Deschutes River canyon. The new line diverted traffic from the Columbia Southern, and Shaniko began its decline. Passenger service to Shaniko ended in the early 1930s, and the entire line stopped running in 1966.

Shaniko won a few short reprieves in its story. It housed workers and their families during the construction of Highway 97. The town’s businesses benefited from the grading and improving of roads in Wasco County in the 1920s and 1930s, and the building of a gas pipeline in the 1950s. Finally, in 1959 the Oregon Centennial Commission awarded Shaniko with the odd title: "Oregon’s Ghost Town of the Year."​ The population dwindled after this to a few dozen people.

In the 1980s a developer tried to restore the Shaniko Hotel but later sold the property to Oregon businessman Robert B. Pamplin Jr. He purchased the hotel as well as a few small businesses and city lots in 2000. Pamplin renovated some buildings and planned to build new houses for workers who would cater to tourists. But in 2008, the Shaniko City Council and the state of Oregon denied Pamplin an easement from a well on one of his lots to supply water to the hotel and restaurant. He shut down the hotel and cafe, capped off the well, and closed shop.

Shaniko attracts ghost town tourists every year, but water issues prevent large scale tourism. A few structures still stand, like the old wooden water tower, city hall complete with an old jail, the school, and the old post office. Local businesses operate from April to September for what tourists they receive. Each year in August, an event known as “Shaniko Days” attracts hundreds of people. The Shaniko Preservation Guild, organized in 2004, operates a museum, hosts an annual wool gathering, and sponsors the yearly Tygh Valley Bluegrass Jamboree as well as The Ragtime & Vintage Music Festival.

An old house in Shaniko. (Oregon State Archives, 2019) Get a high resolution image of this house in the Oregon Scenic Images Collection​.​

Old cars in Shaniko. (Oregon State Archives, 2019) Get a high resolution image of the cars from the Oregon Scenic Images Collection​.