The first settler in Cosmos Township was Daniel Jackman, a native of Maine, who built his home in the summer of 1868. Several other settlers become homesteaders that year, and Cosmos began. Originally, the town was called "Nelson" after Ole K. Nelson; he was credited with bringing the first team of horses and plow and breaking the first soil. In January 1870,  the town and township’s current name of Cosmos was proposed by surveyor and township clerk Daniel Hoyt. Cosmos is an ancient Greek word meaning order and harmony.  

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The town of Cosmos was incorporated on January 25, 1870 and remained small until rumors spread in the early 1900’s that a railroad would be built. In 1922, the Luce Railroad (Minnesota Western) was constructed and Cosmos continued to grow. On September 24, 1926, the present village plat was made and Cosmos became an incorporated village.