The home is a Georgian/Colonial Revival built in 1890 for George Draper Dayton, the eventual founder of the Dayton Department Stores (now the Target Company).

The house was designed by architect Wallace Dow, who has been referred to as the Builder on the Prairie. Dow was chosen by the state of South Dakota to design its pavilion for the Chicago World's Fair in 1892–1893.

The house was originally constructed in just four months.

In 1902, the Dayton family departed for Minneapolis and the Smallwood family took up residence in the home.

It was later occupied by the Cashel family and was eventually used as a nursing home/boarding house.

In October 2002, the building was purchased for $150,000 by Historic Worthington Inc., a local non-profit group organized to preserve historic structures.

Before initiating restoration work, a Historic Structures Report was completed by River Architects with a team of conservators and other professionals. Original pieces of wallpaper and paint chips were found and were used to make the selection of the restoration materials; the wallpaper, drapes, and furnishings have been chosen to reflect the period when the Dayton family resided in the home (1890–1902).

While the woodwork, fireplaces, and floors were essentially intact, some missing or broken pieces were fabricated by local artisans.

Interesting "finds" during the restoration: a descendant of one of the former residents donated the original blueprints (eight pages) to the project; a missing fireplace mantle and mirror that had been relocated, years prior, were subsequently donated back to the project.

In December 2003, the Historic Dayton House was placed on the National Register of Historic Places; the project received one of the Minnesota Preservation Alliance's house preservation awards for 2004. The two-year restoration cost approximately $2 million.

The restored house is used as a gathering place for receptions, weddings, meetings, parties, and other social events; there are two guest suites on the second floor available to overnight guests.