The hamlet grew enough to warrant the construction of a post office and train depot on the Florida Railroad in 1870, but it was never incorporated as a town.
Initially, Rosewood had both black and white settlers.
Most of the local economy drew on the timber industry; the name Rosewood refers to the reddish color of cut cedar wood.
Two pencil mills were founded nearby in Cedar Key; local residents also worked in several turpentine mills and a sawmill three miles (4.8 km) away in Sumner, in addition to farming of citrus and cotton.
The town was abandoned by its former black residents; none ever moved back.