Marcus Daly was born on December 5, 1841, in Ballyjamesduff, County Cavan, Ireland, one of the children of a small farming family. He emigrated to the United States as a young man, worked his way west, and learned mining in Nevada, where he gained experience in the great silver mines of the Comstock Lode. There he also formed lasting business connections, including his friendship with the California mining investor George Hearst.

Butte began as a mining camp high in the Rocky Mountains of southwestern Montana, in the broad bowl of Summit Valley along Silver Bow Creek, near the Continental Divide. Montana became a separate territory of the United States in 1864, and in July of that year prospectors found placer gold in the gravels of Silver Bow Creek. News of the discovery drew miners to the valley, and the camp that grew up around the diggings took its name from Big Butte, the solitary conical peak that rises northwest of the settlement.