Established in 1869, Oakwood Cemetery, became the community's primary cemetery after replacing the original Baldwin City Cemetery (Pioneer Cemetery), which was abandoned due to issues with the underground water table. On September 4, 1879, the Baldwin City Cemetery Association purchased Oakwood Cemetery from the Kansas Education Association of the Methodist Episcopal Church.

Over the years, the cemetery has expanded through three major additions. The Schnebly Addition was added in 1911, the Gaines Addition was acquired in 1948, and the final expansion, encompassing land west and north of the original cemetery, was completed in 1969.

The stone building within the cemetery was originally constructed in 1903 by George E. Nicholson as a private mausoleum to house the remains of his wife at the Nicholson family home on 8th Street. In 1911, his wife was reinterred at Oakwood Cemetery and Nicholson sold the mausoleum to the cemetery for $400, where it was repurposed as a receiving vault. In 1988, two of the large stained-glass side windows were stolen from the building.

Many of Oakwood Cemetery's most recognizable features were added through the generosity of local residents. The catalpa trees lining the center drive and the hard maple trees along the eastern and southern boundaries were planted in 1926. In 1940, William Markham donated the memorial gateway at the cemetery's main south entrance. Four years later, Dr. Harry Webster donated the southeast corner entrance, while Claude Beeks donated the east gateway. In 1947, O.W. Longwood provided the southwest entrance. All of these entrance structures were built by Ralph Gilman.