In recognition of the need of a county-wide trails organization, Headwaters Trails Alliance was established as a 501 (c) (3) non-profit corporation in 1996. The organization was formed through the efforts of Fraser Valley Partnership for Trails and Grand Lake Partners for Trails and with the support of the Grand County Board of Commissioners, the Grand County Planning Commission, and the individuals and groups who served on the Headwaters Trails Committee.

In 1988, Grand County hired a team to produce the first county-wide trails map, create the Headwaters Trails logo, and post signs featuring this logo to mark all trail systems identified in the map. The Headwaters Trails Committee, created this same year pursuant to C.R.S. 33-11-106, developed a purpose for the future development of trails within Grand County. Along with this purpose a number of goals and objectives were produced to guide future trails decisions.

In 1993, the Adopt-A-Trail Program (AATP) was started by a local mountain bike organization called Winter Park Fat Tire Society (WP FATS).  Due to United States Forest Service (USFS) budget cuts and an increase in trail use by locals and tourists alike, trails were being used to a greater degree than they were being maintained.  WP FATS recognized this problem and started the AATP, in conjunction with the USFS, to help solve the problem.

Grand County began work on the Headwaters Trails Master Plan in 1994. This plan was developed through the purpose and the goals and objectives set forth by the Headwaters Trails Committee. The Grand County Planning and Zoning Department began meeting with town governments, local chambers of commerce, the United States Forest Service (USFS), the Bureau of Land Management (BLM), Rocky Mountain National Park (RMNP), Recreation Districts, and local trail groups to receive input on the project. These meetings transformed the plan considerably. An open meeting was announced and held with the Grand County Board of Commissioners on October 25, 1994 to present the modified draft to the public. The final draft of the Headwaters Trails Master Plan was presented to the Grand County Planning Commission on January 11, 1995. The Headwaters Trails Committee was chosen to play the role of administrator of the Headwaters Trails Master Plan. When Headwaters Trails Alliance was established, it assumed this role.

When WP FATS dissolved in 1996, the AATP became part of the Fraser Valley Partnership for Trails (FVPT), a nonprofit volunteer organization in the Winter Park/Fraser area.  FVPT ran the AATP as an entirely volunteer, grassroots program until the spring of 2001, when Headwaters Trails Alliance assumed responsibility for, and management of, the AATP.  Expansion and continued operations of the program are based on a collaborative effort involving Headwaters Trails Alliance, United States Forest Service, and Fraser Valley Partnership for Trails.