Settlement at the site began in the early 1870s, when Bill Anderson opened a general store there.
At first the community was called Eldorado, but when settlers learned from postal authorities that the name was already taken they suggested the name Paradise Prairie, because of the wildflowers surrounding the site. The name was later shortened, and the community received a post office branch in 1876.
In 1893 the Rock Island line reached the area, and the town moved a mile northeast to take advantage of the railroad, which eventually made Paradise a prosperous retail market for area farmers.
By 1900 the town had two cotton gins, two lumberyards, two hotels, a grade school, and a weekly newspaper, the Paradise Echo.