By 1866, the population and commercial interests of the part of the country in which Okolona is located, east of Chuquatonchee Creek, had increased so that in response to the requests of its people the Legislature enacted a law dividing the county into two judicial districts. The eastern part of the county was designated as the Second Judicial District and the western part as the First. It was further provided that equal terms of Circuit and Chancery Courts would be held in each district, one in Okolona, and one in Houston.

Okolona quickly grew and became the major center of trade for Chickasaw County. In the cotton market Okolona was a fierce competitor, virtually controlling the cotton trade of the county. Leading merchants, such as C.C. Dibrell, Buchanan and Son, and Myers and Houseman transferred their business from Houston, Mississippi to Okolona. The railroad increased the processing capacity of Okolona to develop its industry of producing cotton, which allowed for efficient processing of the raw material prior to shipment to market. From 1870 to 1890, the U.S. Census figures indicate that Okolona grew from a population of 1,410 people to 2,099 people, a 49% increase. A map from 1898, from the Atlas of the World indicates Okolona as one of the "Chief Cities" of the state of Mississippi.

From the diary of G.H. Babbitt (born in Okolona in 1877), an entry on August 11, 1897 tells of electricity coming to Okolona. The U.S. Census figures indicate a population growth of 69% between 1900 and 1920. By 1900, Main Street was much as it is today, with a long row of buildings on either side of Main Street between Olive and Gatlin Streets (was Meridian Street at the time). There were over forty businesses in the downtown area by 1904. Among them were blacksmith shops, an ice cream factory, livery stable, a saddle maker, hat shops, an opera house, Chinese laundry, meat stores and hotels. Also, there were dry goods, general merchandise, hardware and furniture stores. Several businesses were labeled "colored" businesses were located primarily on the north side of Main Street, west of what is today Olive Street.

In 1904, there were two hotels and two banks in downtown, one of which is the Merchants and Farmers Bank, built circa 1903. (It was individually listed on the National Register on 14 May 1987.) Shortly after the turn of the century, Okolona acquired a telephone system. In 1907, the first "Horseless carriage" appeared in Okolona. The town continued to prosper through the 1920s and 20s, with a city steam electric plant and four cotton gins. The city's sewage system was installed between 1912 and 1915.

Because most of the older industrial buildings that stood between the railroad and the downtown have been demolished, the district, as it survives today, is illustrative of the development of commerce and residential neighborhoods. Almost all of the contributing residential architecture in the district is a direct result of the prosperity related to the industrial development spawned by the railroad and the commerce the town provided to the Eastern District of Chickasaw County.

Early twentieth century houses range from modest Craftsman and Colonial Revival bungalows to fine examples of such styles as Colonial Revival, Neo-Classical, Queen-Ann, and English Cottage. The houses lie within three blocks of the downtown in all directions.

Okolona is notable for its well-preserved early twentieth century churches and institutional buildings. The churches include the First Methodist Church, built in 1907-08; Grace Episcopal Church, built in 1908; Okolona Presbyterian Church, built in 1919; St. Theresa's Catholic Church, built about 1922; and the First Baptist Church, built in 1924. The Carnegie Library was built in 1915, and the Okolona High School (presently the elementary school) was built in 1924.