The town was constructed in 1935 to provide accommodation for those working on the construction of the dam and their families with the first businesses opening in 1936. The town was designed by civil engineer Charles Bank Mott like a suburban with gravel streets, electricity, street lights, reticulated water, stormwater drainage, and sewerage. Mott was seconded for three years from the
Brisbane City Council. When the project commenced, the town was informally known as the
Stanley River township. The
Queensland Government decided to call the town
Somerset after local pastoralist
Henry Plantagenet Somerset, the
Member of the Queensland Legislative Assembly for
Stanley from 1904 to 1920. However, the postal authorities objected, fearing confusion with
Somerset in
Far North Queensland and
Somerset in
Tasmania. In January 1936 it was officially named
Somerset Dam after
the dam, which was named after Henry Plantagenet Somerset. As there was already a Somerset State School near
Kilcoy (which had opened in 1915), the education authorities had decided to call the town's school
Silverton. Silverton Provisional School opened in February 1936 at the end of First Avenue (). In 1958, it became Silverton State School. Circa 1959, it was renamed Somerset State School (the school of that name near Kilcoy having closed in 1943). On 24 January 1966, it renamed Somerset Dam State School. It closed on 31 December 2000. A community hall was officially opened on Wednesday 22 July 1936. It was constructed by the Stanley River Works Board (who were responsible for the construction of the dam) and could seat 200 people. It could be used as a dance hall and had projection facilities to be used as a cinema. Initially opened as Somerset Hall, by 1938 it had become known as Coronation Hall (presumably in honour of the
Coronation of King George VI in 1937).The dam was being built as part of a program of providing employment during the
Great Depression. During
World War II construction of the dam was halted to enable the workers to be redeployed on war-related work, such as the
Cairncross Dockyard with work resuming in 1948. About 450 people were employed constructing the dam during which time the population of the town exceeded 1000 people. The church building was the former St Mark's Anglican Church of
Fernvale which, having closed in 1934, was purchased by the
Queensland Government for £50, relocated to Somerset Dam, renovated and re-roofed. The church closed circa 1995. As at 2020, the church building still exists but has been converted to holiday accommodation. On the same day and at the same time as the Anglican church was dedicated, so too was St Joseph's Catholic Church at 5 King Street (). It was blessed and dedicated by
Archbishop James Duhig. == Demographics ==