The area was informally established as the community of Bethlehem in December 1883 as a stop along the Belmont – Monroe line of the Gainesville, Jefferson and Southern Railroad. The stop was named after the local Bethlehem Methodist Church. The church itself was named after the ancient town of Bethlehem, identified in the Gospels of Matthew and Luke as the birthplace of Jesus. The railway line was removed in 1946. Bethlehem was incorporated as a town in 1902 by an act of the Georgia General Assembly "under the name and style of the town of Bethlehem". At the time of its incorporation it was part of Walton County, but later became part of the newly formed Barrow County in 1914, which was created using land previously belonging to the nearby Gwinnett, Jackson, and Walton counties.
