Custer township was first settled in 1868 and organized on October 14, 1876. It was named in honor of General George Armstrong Custer who fought in the Civil War and was killed with all of his men by the Dakota in the Battle of Little Bighorn.

Custer was one of the first areas of Lyon County to be settled, but it was not among the first townships. Most of Custer’s early settlers were Welsh.

The Chicago and Northwestern railway village of Garvin lies in the Custer township. Garvin was platted on April 30, 1886. Originally, the village was known as Terry, followed by Kent, before receiving its present name in July of 1891 in honor of H. C. Garvin, a traveling freight agent of the railway.

Lake of the Hills is an often dry lake that lies within the border of Custer.