The Rock Island Railroad was built through the area in 1868. This led to the area being known as Summit Cut. This is in reference to the ridge that forms the watershed divide between the Missouri River and the Mississippi River. The town officially became Adair on August 20, 1872, when it was incorporated with the county. The town is named after General John Adair, a general in the War of 1812 who later became the 8th governor of Kentucky. Adair was the scene of the first successful train robbery in the American West when on July 21, 1873, the James-Younger Gang (led by Jesse James) took US $3,000 from the Rock Island Express after derailing it southwest of the town. The derailment killed the engineer.
A rare F5 tornado occurred near this town on June 27, 1953.
Adair is recognizable from Interstate 80 by its tall yellow "smiley-face" water tower. Humorously known as "the happiest town on Earth", its road sign warmly greets visitors with, "Welcome to Adair; it'll make you smile". Some of the local businesses incorporate the smiley-face tower image into their company logos.