The building of the Chicago, Kansas, and Nebraska Railroad, later known as the Chicago, Rock Island, and Pacific Railroad, spurred the growth of Gladstone. James Hubble bought 80 acres of land from German settler Elias Weiker and quickly platted 23 blocks for the town in 1886. Hubble had great plans for the little town named after the English Prime Minister William Evarts Gladstone, but no major township developed.
Gladstone did boast several businesses, including a livery, multiple grocers, blacksmiths, a lumberyard, a hotel, a bank, and a pool hall in its prime. Two grain elevators also engaged in commerce until one burned and the other eventually closed. The Depression drove many businesses to other areas.
A school district was organized in 1881, but Gladstone consolidated with Fairbury in 1968. Two churches built east and west of town are called Gladstone churches since no such facility was ever built in Gladstone.