The Schooner Gulch area was inhabited by the central Pomo Indians. Russian and native Alaskan hunters were active in the area beginning around 1812, and Mexicans owned land in the area by the 1840s.
Scottish immigrant John Galloway founded the Schooner Gulch settlement and established a wood milling business there in 1866. The Galloway mill only operated until 1868, but other mills operated there until the late 19th century, such as a mill owned by an A. Saunders (of quite large size, at 25,000 feet (7,600 meters) per day), built in 1875, Burned down in 1880 but was rebuilt this year.
The Galloway School District was officially founded in 1874. Galloway School, a small school (never more than 40 students), was founded the same year and operated until 1936. The land around it was converted to farmland in the 1940s and is now forest.
In 1912, Russian Baptist immigrants bringing steam-powered heavy equipment from Point Arena to their colony further south were crossing a bridge then spanning Schooner Gulch when the bridge collapsed under the weight of its eight-ton lead engine. Colonist Nicholas Pogsikoff was killed and buried at this site, but his grave is now lost.
Schooner Gulch timber, like all timber in Mendocino County, was shipped by sea. Typically, the small dwellings that grew up around these mills were abandoned when the mills ran out of readily available wood and closed.