John and Daniel Murphy traveled to the Sierra Nevada with the Carson-Robinson party in September 1848. After reaching Angels Creek, the party split up and went their separate ways. The Murphy brothers settled at a point on Coyote Creek in October, which they named Murphys Diggings. Their camp didn't last lost, and they moved further up the mountain, later establishing the town of Murphys. This location then became referred to as Murphys Old Diggings.

Eventually, Mexican prospectors drifted to the site of Murphys Old Diggings, and started a small camp around a central plaza, which they renamed Vallecito (Spanish for 'little valley'). In 1852, discoveries of rich gold ore near the middle of town led to rapid growth. In August 1854, the post office was established to serve the town, which boasted a wide variety of businesses and organizations.

Vallecito's Coyote Creek was especially noted during the 1850s for its production of large gold nuggets. Some specimens were reportedly as large as 18-25 pounds. During its peak, Vallecity produced some $60,000 per month, but by the end of the 1860s the yield dropped to only $20,000 per month. Eventually, as with the other camps along the Gold Rush, the gold played out and the townsite dwindled. Today only a few hundred people live scattered around the former town, and only one building remains from the boom days.

I Visited Vallecito