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The region that is now Dillard was settled in the early 19th century. John Dillard, a veteran of the American Revolution, and his son James moved into the area with land grants and lottery purchases. They acquired large tracts of land, cleared forest, and established farms and homesteads in what would become the valleys of Rabun County.

As settlement increased, stagecoach routes and toll roads became important. One of the principal early thoroughfares was the Rabun Turnpike, along which William F. Dillard, grandson of John Dillard, established a way station and later an inn that served travelers. Timber and logging were also crucial industries, especially in the late 19th and early 20th centuries, when lumber was shipped via rail after rail lines expanded into Rabun County.

Infrastructural growth included the arrival of the Tallulah Falls Railroad, which was extended to Dillard in 1906. This railroad spurred economic opportunities, enabling shipment of lumber, supplies, and facilitating access for tourists. Roads and scenic byways also developed over time, increasing Dillard's connectivity despite its mountainous terrain.

Culturally, Dillard has long been characterized by its mountain heritage and natural beauty. The Dillard House, an inn and restaurant established by Carrie and Arthur Dillard in 1917, has become a central landmark known for hospitality, family-style dining, and conference hosting. The town draws visitors for its scenic drives, mountain views, crafts, and festivals tied to its location in the North Georgia Mountains.

Today, Dillard offers a relaxed small-town lifestyle with strong tourism appeal. With a population in the low hundreds, the town remains rural, but lodgings, boutique shops, antique stores, and eateries cater to those seeking a mountain retreat. Outdoor recreation, scenic vistas, and peaceful surroundings are the main draws. The balance between preserving historic charm and accommodating visitors defines Dillard's modern identity.