Vaughn and the bay it sits on, Vaughn Bay, were named after William D. Vaughn who claimed land on the south shore of the bay. He was unable to secure title however and later moved to Steilacoom where he took up gunsmithing.
The Vaughn post office was established on February 29, 1888, in Sec 2 T 22 N R 1 W W M. Vaughn was once large enough to support a high school, Vaughn Union, from 1907 to 1947 when students then went over to Peninsula at Purdy. Part of the high school remains in a form of the Key Peninsula Civic Center.
Vaughn once had the oldest church building on the peninsula until a fire started when a heated baptismal font shorted out after accidentally being left on devastated it in 2006. The remains and property have since been purchased by out of state investors as a summer retreat. Services are now held in a room at the civic center.
The post office has since relocated east, away from the bay and civic center to the Key Peninsula Highway and Key Center but yet retains the Vaughn name much like when the Wauna post office did the same albeit in a westerly direction to a shopping center, Lake Katherine Village in the 1980's.