The onetime silver boomtown with a population of 4,000 as late as 1940, was named in honor of General William Shafter, who at one point commanded Fort Davis in West Texs. In the early 1900s six silver mines were in operation near Shafter. When the mines closed, the town declined It was later the location for several scenes in the 1971 movie "The Andromeda Strain." As of 2012, at least one silver mine, La Mina Grande, had been reopened by Aurcana Corporation.

Silver was discovered in this mountainous area, north of Presidio, in 1882 by John Spencer. He and General Shafter collaborated to establish the mining operation.

In 1928, the mines were sold to the American Metal Company, but operations continued unabated for another 12 years or more. In the 1940s, faced with increased production costs, a shortage of miners, and unionization efforts by employees, the American Metal Company shut down the operation. When two nearby military facilities also closed, Shafter went into rapid decline.