The Great Chicago Fire spread out of control due to many different factors, including extremely dry weather, wind, and miscommunication in the fire department. Looking for someone to blame -- since it would make a better story than an accident -- a reporter named Michael Ahern made up a story about a cow kicking over a gas lantern during milking. The fire had started in the barn of the O'Leary family, and they became targets of blame. It was easier to attack a specific person instead of investigating the real causes, so newspapers continued to spread the story; the O'Learys had little recourse to fight the allegations, being poor, and this only helped the idea that they had started the fire through neglect and stupidity.

Late in November, a two-week inquiry was held by the police... it established clearly that the O'Learys were in bed when the fire began and that they were solid citizens. But to no avail. Idle gossip had hardened into established fact.
(Murphy, The Great Fire, amazon.com)

This sort of scapegoating is common; whenever something bad happens, news outlets rush to have "the scoop" regardless of what is known, and many reporters over time have been guilty of fabricating stories. In this case, the single false story became so widespread that it is still believed by many; the O'Learys never recovered from the infamy, although the Chicago City Council finally claimed their innocence fully in 1997.