The rise of Kalimpong to prominence came after the end of the Anglo-Bhutan War; until 1865 the area in which it stands had been administered, for 150 years or more, by the Bhutanese official in charge of the small fort at Dumsong, about 10 miles to the north-east of Kalimpong, while his superior lived at a larger fort about 25 miles to the east; Dalimkot, large enough to hold a garrison of 300 men. Rennie has described how these forts were seized and occupied by troops of the British and Indian armies during the war, after stiff resistance at Dalimkot, with considerable loss of life, and were dismantled or abandoned after peace prevailed.

According to Arthur Foning, in his book "Lepcha, My Vanishing Tribe"; a fascinating account of tribal and family life in the Kalimpong area during the last two or three hundred years; Kalimpong owes its name indirectly to the Bhutan administration; the Bhutan revenue officials used to come from Damsong Fort once a year to Rinkingpong (the side of Kalimpong Cantonment since 1962), an hour's walk south of Kalimpong to collect grain and other produce from the Lepcha villagers of the area; and, when not occupied with their taxes, these local tribesmen used to organise field sports for themselves on such level ground as they would find up there; so the name Kalimpong means, in Lepcha, "Ridge Where We Play". Others, however, give the Lepcha words a different meaning; for K.P. Tamsang, author of "The Unknown and Untold Reality About the Lepchas", Kalimpong simply means "Hillock Assemblage". The eccentric General Mainwaring, who, in his grammer of the Lepcha Language (1875), claimed that Lepchas was the oldest language in existence, "unquestionably far anterior to the Hebrew or Sanskrit", believed the name to be Tibetan, meaning 'commandment stockade'. Tibetan gives it the meaning 'stockade of the King's Minister'. Another version says that the name originated from 'Kaleon' which was an official of the Bhutan Raja and "Pong" meant area or stronghold. The only certain thing the name 'Kalimpong', then, is that its meaning is uncertain.

After the Sinchula Treaty with Bhutan in 1865, the Kalimpong area was made into a sub-division called Dalimkot within the Western Dooars District; but, in the following year it was absorbed into the Sardar Sub-Division of Darjeeling District. It was not until 1916 that the area became a separate sub-division again, with Kalimpong as its headquarters. This upgrading came about because part of the hillside just to the south of Kalimpong was to be laid out as the Development Area in order to convert Kalimpong into a hill station alternate to Darjeeling.