Creating a fictional town means you also have to create a fitting fictional name. I recently attended a reading by Charles Dickinson, who mentioned that the fictional Euclid Heights in his novel A Shortcut in Time was inspired by his hometown of Arlington Heights, Illinois. The use of “heights” in the fictionalized name certainly echoes the original, and “Euclid” has the same sort of formality that “Arlington” does, which makes it apt. (Interestingly, Euclid is the name of a major street that runs through the real Arlington Heights.)
Charles Baxter set many stories, including his novel Saul and Patsy, in the fictionalized Five Oaks, Michigan. It sounds small and Midwestern, doesn’t it? It’s no surprise, then, to find other nature-inspired names—Cedar Springs, Coldwater, Farmington Hills, Green Oak, Harbor Beach—on a real map of Michigan.
Stephen King’s fictionalized Castle Rock, Maine is the setting in several of his novels, including Cujo and Needful Things. It has same sort of regal sound as real towns in Maine, such as Litchfield, Newcastle, and Edgecomb.
Consider names that mirror the atmosphere of your town. Think of where it would appear on a map and look at the kinds of names associated with those specific areas. Make a short list of possible names and choose one that captures—in sound and connotation—the very essence of the town you’ve created.