The first few years saw great expansion of Cave City. In 1859, two families opened a hotel. The post office, located at Woodland (north of Cave City on the railroad, supposedly where Highway 335 crosses the L & N) was moved to Cave City in January 1860. Beverly D. Curd was the first postmaster and merchant. The post office was located in the general store owned by B. D. Curd and his brother H. P. Curd, which was the town’s first building, at the corner of First and Kirtley (now Broadway). According to stories, when this building was erected, corn was growing where Broadway is now located. Timber for this building was hauled into town from nearby Flint Knob.

Tradition holds that Judge C. Roberts was the second merchant of Cave City and was the first to build a residence in Cave City. He built the home owned by Fannie Curd Davis, making it the oldest in Cave City. The S. J. Preston Home (Ella Jameson home) was built in 1868 by John White, a contractor of Horse Cave. Just east of the Preston Home was the H.P. Curd home, built about 1868.

G. T. Gardner came to Cave City in 1868 and lived there until his death. He helped build the E. M. Ford and H. P. Curd homes – planing and dressing the weather boarding and flooring by hand. He also built many other homes in and near Cave City.

By 1870, the population was 387. New businesses, churches, and banks began to spring up. The railroad continued to be the principal force in the life and commerce of the town.

Much of the oil found in Barren County was taken to Cave City for shipment by railroad. In 1880, Barren County was the fourth leading petroleum producing area in the United States; 5,376 barrels were pumped that year. The oil was hauled to Cave City in barrels, and unloaded into a tank near the railroad, and hand pumped into railroad tank cars.

Seepage from this oil tank ruined one of the first water wells in the town. Jack Gavin dug the first water well in 1865. Before this time, Cave City depended upon the creek in the small cave located there for all of its water. Gavin dug the second water well some eight or nine years later.