Two books provide some information about the history of the Town of Lebanon. Western Historical Company published the first, The History of Dodge County, Wisconsin, in 1880. The second, Dodge County, Wisconsin, Past and Present, was written by Homer Bishop Hubbell in 1913.
Before the arrival of European settlers in 1843, that portion of the Town of Lebanon lying east of the Rock River was occupied by the Menomonee Indian nation and the portion west of the Rock by the Winnebagos. The Moldenhauer family, with 10 children, arrived in Lebanon from Hamburg, Germany, in 1843. Several other German families arrived soon after. Germans largely settled the Town, but at least one English family is included with the early pioneers. Reverend Erdman Pankow is reported to have bought 80 acres of government land on Sugar Island by 1845.
The Town's economy remained exclusively farming with no settlements beyond 1880. Land use in 1879 showed 3,767 acres of wheat, 992 acres of grasses, 903 acres of oats, 778 acres of corn, 524 acres of barley, 228 acres of rye, 112 acres of potatoes and 68 acres of apple orchards. This left about 15,112 acres or two thirds of the Town unaccounted for. Henry Moldenhauer, the oldest son of the founder, took possession of the family homestead in 1857 and built the first store in Lebanon in 1878. He was the first postmaster in the same year.
The Milwaukee, Sparta and Northwestern Railroad crossed the Town in its early years. Lebanon was also known for its many churches and schoolhouses. Lutheran churches were built in the Town in 1845, 1850 and 1854. A Baptist church was built in 1849. The agricultural economy supported large families and the Town's population grew rapidly. The population in 1870 was 1,621, a level not reached again until 1990. The unincorporated community of Lebanon existed as a small hamlet in 1913 and contained a post office.