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In 1828, George McGarrah settled at Big Spring with his family on the modern day corner of Spring and Willow, founding the town of Washington, and starting work on the courthouse. On October 17, Washington County was established, Washington chosen as the county seat. The Washington Courthouse was finished in 1829, and also contained the post office. Later in the year Postmaster Larkin Newton changed the name to the Fayetteville Courthouse, to avoid confusing with Washington, Hempstead County. Two councilmen selected to name the city were from Fayetteville, Tennessee, which was itself named for Fayetteville, North Carolina (where some of its earliest residents had lived before moving to Tennessee). That original Fayetteville was named for General Lafayette, a French general who helped the colonies gain independence in the American Revolutionary War.

The first store in Fayetteville was opened by John Nye in a small building constructed by James Holmsley. In 1832 David Walker, Chief Justice of the Arkansas supreme court, built a double log cabin on what is now Center Street. In 1822 Archibald Yell, the second Governor of Arkansas, built a house and called it "Waxhaw" after his home in North Carolina. This was on the outskirts of town then but now is a street named after him that connects College and School streets. The first hotels were the Burnside House and the Onstott House. Fayetteville was incorporated as a town on November 3, 1836.

In 1859, a city charter was obtained from the Legislature. During the Civil War the municipal government was suspended and was not reinstated until 1867. P.V. Rhea was the president of the town trustees in 1836; J.W. Walker was the first mayor under the charter of 1859, and M.L. Harrison was the first mayor when the government was reorganized in 1867. The telegraph came to Fayetteville in 1860, strung along the Military Road from St. Louis, Missouri to Little Rock.

During the American Civil War, the Union General Samuel Ryan Curtis occupied Fayetteville on February 18, 1862 and the following week, the Battle of Pea Ridge took place northeast of Fayetteville. The city housed wounded soldiers from the Battle of Prairie Grove in December 1862, and housed injured troops on Dickson Street. Confederate troops besieged Union soldiers in Fayetteville on April 18, 1863 at the present-day intersection of College Avenue (U.S. Route 71B) and Dickson Street, and at their headquarters. Union soldiers held the city against cannon fire and cavalry attacks, although their headquarters sustained damage. The building was restored and is operated as the Headquarters House, a museum of the Washington County Historical Society. Fayetteville was occupied from December 1862 until May 1865 (except May–September 1863) by the First Arkansas Union Cavalry, a regiment of Union men from Northwest Arkansas. Union forces repelled a Confederate attack in October 1864. After the war, the United States government established the Fayetteville National Cemetery in 1867. A cemetery for Confederate dead was founded in 1873.

Newspapers were established early; in 1859, Elias Cornelius Boudinot, a young half-Cherokee attorney, and James Pettigrew founded The Arkansan. The Fayetteville Weekly Democrat began publishing in 1868. It later developed as the Northwest Arkansas Times, and is still in print today. The Fayetteville Schools District was founded on March 20, 1871 as the first independent school district in Arkansas. The public school system was established by the Reconstruction era legislature; before the war, all education was private. Arkansas had struggled with a state banking crisis, resulting in the illegality of banking until 1868. Following the reinstatement, the Stark Bank became the first bank in the state in 1872, becoming the William McIlroy Bank four years later. This institution remains today as Arvest Bank.

In 1954, a few days after Charleston, Fayetteville was the second school district in the southern United States to implement school integration in response to Brown v. Board of Education.

Fayetteville is the second most populated city in Arkansas. In the 2010 census, Fayetteville had a population of 73,580 and grew by 26.8 percent from the year 2000.

As of the census of 2010, there were 73,580 people, 33,661 households, and 14,574 families residing in the city. The population density was 1,333.0 people per square mile (514.0/km²). There were 38,281 housing units at an average density of 693.5 per square mile (267.4/km²). The racial makeup of the city was 89.8% White, 6.0% Black or African American, 0.8% Native American, 1.1% Asian, 0.2% Pacific Islander, 2.8% from other races, and 3.1% from two or more races. 6.4% of the population were Hispanic or Latino of any race.

While Arkansas as a whole is rated yearly as a state with a poor educational system, Fayetteville was the third best educated city in Arkansas (after Maumelle) in the 2010 Census, proportionately, with 40.5% of adults age 25 or older holding an associate degree or higher, and 24.6% of adults possessing a bachelor's degree or higher.

There were 33,661 households, out of which 19.9% had children under the age of 18 living with them, 31.4% were married couples living together, 7.1% had a female householder with no spouse present, and 58.7% were non-families. 45.2% of all households were made up of individuals, and 7.1% had someone living alone who was 65 years of age or older. The average household size was 2.04 and the average family size was 3.02.

In the city, the population was spread out, with 16.9% under the age of 18, 23.6% from 18 to 24, 31.5% from 25 to 44, 19.3% from 45 to 64, and 8.4% who were 65 years of age or older. The median age was 27.8 years. For every 100 females, there were 100.9 males.

The median income for a household in the city was $31,393, and the median income for a family was $62,258. Males had a median income of $42,004 versus $29,373 for females, indicating a huge income disparity. The per capita income for the city was $26,267. 38.7% of the population and 26.9% of families were below the poverty line. Out of the total population, 19.0% of those under the age of 18 and 17.3% of those 65 and older were living below the poverty line.

69.6% of Fayetteville's population describes themselves as religious, above the national average of 48.34%. 50.8% of people in Fayetteville who describe themselves as having a religion are Baptist (37.22% of the city's total population). 15.5% of people holding a religion are Catholic (7.7% of the city's total population). There are also higher proportions of Methodists and Pentecostals above the national average.