The area was originally called Banks and Braes. Paul Shoup, an executive of the Southern Pacific Railroad, and his colleagues formed the Altos Land Company in 1906 and started the development of Los Altos. The company acquired 140 acres of land from Sarah Winchester. Shoup wanted to link Palo Alto and Los Gatos by making Los Altos a commuter town. It continued a train-a-day operation to and from San Francisco.
In 1908, Southern Pacific Railroad began running steam train service through Los Altos (April 19, 1908) with five trains per day. Two freight cars served as train depot. Also, the first commercial building, Eschenbruecher's Hardware, was built in downtown. In 1913, the craftsman-style Los Altos train station was built at 288 First Street.
By 1949, many residents were dissatisfied with the zoning policy of Santa Clara county. Also, there was a constant threat of being annexed by neighboring Palo Alto and Mountain View, so they decided to incorporate. Los Altos became the eleventh city in Santa Clara county on December 1, 1952.
Train service stopped its operation in January 1964, and the train track became Foothill Expressway. Los Altos may have a legitimate claim to having the first scientifically designed sound baffle in the year 1970. Santa Clara County undertook a seminal study to calculate the effects of alternate soundwall designs along Foothill Expressway. The resulting wall brought about the predicted reduction of seven to ten decibels in noise pollution levels experienced by adjacent homes.
In 1976, Apple co-founders Steve Jobs and Steve Wozniak built the first 50 Apple I computers in Jobs's garage in Los Altos.
In 2004, landlord Judy Fusco rented her Los Altos home, later known as 'Casa Facebook', to Mark Zuckerberg where he and a few other associates scaled Facebook from 200,000 members to 2.5 million.