The Native Americans who lived in this area prior to the establishment of Fort Tejon are generally referred to as the Emigdiano. They were an inland group of the Chumash people who lived along the Santa Barbara channel coastline. Unlike their coastal relatives, however, the Emigdiano avoided contact with European explorers and settlers, and were never brought into one of the missions or even incorporated into the Sebastian Indian Reservation. One of their villages was located at Tecuya Creek, north of Castac Lake. Another village, Sasau, was on the north shore of the lake, while a third and still larger village, Lapau, was located at the bottom of Grapevine Canyon. Once Fort Tejon was established, the Emigdiano often worked as independent contractors for the army, providing guides for bear hunts and delivering fresh fruits from their fields for sale in officers row.

In 1852, President Millard Fillmore appointed Edward F. Beale to the position of Superintendent of Indian Affairs for California and Nevada, and sent him to California to head off further confrontation between the Indians and the many gold seekers and other settlers who were the pouring into California. After studying the situation, Beale decided that the best approach was to set up a large Indian reservation at the southern end of the San Joaquin Valley and to invite displaced Indian groups to settle there.

In order to implement his plan, Beale requested a federal appropriation of $500,000 and military support for the 75,000 acre reservation he had selected at the foot of Tejon Pass. Colonel Ethan Allen Hitchcock, commander of the Pacific Division of the U.S. Army, supported Beale's plan and agreed to set up a military post on or near the Indian reservation. The army was eager, in any case, to abandon Fort Miller (near Fresno) in favor of a more strategically advantageous site in the southern San Joaquin Valley.

In August 1854, Major J.L. Donaldson, a quartermaster officer, chose the present site in Canada de las Uvas. The site was handsome and promised adequate wood and water. It was just 17 miles southwest of the Sebastian Indian Reservation, and it was right on what Major Donaldson was convinced would become the main route between the central valley and Southern California.
For almost ten years, Fort Tejon was the center of activity in the region between Stockton and Los Angeles. The Soldiers, known as Dragoons, garrisoned at Fort Tejon patrolled most of central and southern California and sometimes as far as Utah. Dragoons from Fort Tejon provided protection and policed the settlers, travelers and Indians in the region. People from all over the area looked to Fort Tejon for employment, safety, social activities and the latest news from back east.