German settlers nicknamed the settlement "Hickory Town" after the thick groves of hickory trees that grew in the area. In 1763, McAllister divided his farm into lots and founded the town of Hanover.
McAllister erected a log house at what is now the corner of Baltimore and Middle streets, and opened a store and tavern.
Hanover at that time was covered with a dense forest of hickory, walnut, and oak trees. McAllister was a Presbyterian who had recently migrated from the Cumberland Valley. In 1745, a Scot-Irishman named Richard McAllister (father of Matthew McAllister) purchased the tract of land upon which the original town of Hanover was built. This line was surveyed between 17, and put an end to decades of disputes over rights and ownership. The dispute was settled when Maryland and Pennsylvania hired British experts Charles Mason and Jeremiah Dixon to survey what became known as the Mason–Dixon Line. This led to numerous disputes about property ownership from the 1730s until 1760. At this time, Maryland and Pennsylvania did not agree on the northern border of Maryland and the southern border of Pennsylvania, and the area that is now Hanover was in the disputed area claimed by both states. Settlers from both Maryland and Pennsylvania began moving into the area in the 1730s. The area was called Digges Choice, and in 1730, a group of Catholics started the settlement that became known as the Conewego Settlement. In 1727, John Digges, an Irish nobleman of Prince George's County, Maryland, obtained a grant of 10,000 acres (40 km 2) of land where Hanover is now located from Charles Calvert, the fourth Lord Baltimore.