The "Lincoln Family Farm" was first "owned" by an individual on August 4, 1837 when John D. Johnston, Thomas Lincoln's stepson, purchased it from the federal government. What would become the Territory (1809) and then State (1818) of Illinois was first explored by French explorers Jacques Marquette and Louis Joliet in 1673. Illinois was part of the French Empire until the conclusion of the Seven Years War (or French and Indian War) in 1763 when it became part of the British Empire. The British officially ceded the land that makes up Illinois to the new United States in September, 1783 as part of the Treaty of Paris that ended the American Revolution. In the 1780s, Massachusetts, Connecticut, New York and Virginia ceded their land claims in the Midwest (now Wisconsin, Illinois and portions of Minnesota and Michigan) to the federal government.

The government combined these into the Northwest Territory, and in the Ordinances of 1785 and 1787 established uniform procedures for surveying the land, as well as delineating territory boundaries and steps for achieving statehood. While settlers began pouring into Illinois in the early nineteenth century, more remote areas like Coles County were not settled until the 1830s. Early settlers clashed with Native American Indian tribes who resided in Illinois: Pottawatomie, Kickapoo, Winnebagoe, Miami, Sauk and Fox. These clashes culminated in the 1832 Black Hawk War in which Abraham Lincoln fought as a Captain in the Illinois Militia. Threats against white settlers largely ceased as a result of the Black Hawk War, clearing the land for further settlement.

Thomas Lincoln bought the "Lincoln Family Farm" from John D. Johnston on December 31, 1840, extending the size of his "Goosenest Prairie" farm in Coles County to 120 acres. The farm, in Lerna, Illinois, was about 95 miles east of Springfield. Legend has it that the name "Goosenest" came from an early settler named Josiah Marshall who compared the fertile soil to the richness of a goose egg; claiming, "this is the very goose-nest." In making this land acquisition, Thomas Lincoln extended beyond his financial limitations, and soon entreated his son for financial assistance.

In October, 1841, Abraham Lincoln purchased the recently-acquired forty acres for $200, four times what his father had paid for it only months earlier. Then, in an act of filial piety, he gave his parents complete usage of the land for the rest of their lives. Abraham Lincoln was not trying to make a buck; instead, he was practically providing for his family by solving a financial crisis and giving them exclusive use of the land.

Lincoln never sold the land, and because Justice David Davis did not list it on Lincoln's posthumous probate inventory in 1865, the title remained formally in Lincoln's name until 1888 when John J. Hall, the son of Lincoln's stepsister, Matilda Johnston Hall, secured title to it claiming to have held "actual, open, continued, uninterrupted, unquestioned, undisturbed, and peaceable possession" of it since 1851. The land remained in the Lincoln family until 1914 when the heirs of John J. Hall sold it off to some Coles County neighbors. In 1929 and 1930, Thomas Lincoln's 80 acres, and six acres of the "Lincoln Family Farm" were sold to the state of Illinois, eventually becoming the Lincoln Log Cabin State Historic Site in Lerna, IL. The remaining portions of the "Lincoln Family Farm" have remained in private hands ever since. After a complex series of land and business deals in the 1970s and 80s, Dan Arnold purchased four acres of the "Lincoln Family Farm" in 2007 and formed the Friends of the Abraham Lincoln Historical Farm in order to preserve the land.