In 1996, the Steelheads were announced as a 1997–98 expansion team by Diamond Sports Management, headed by Cord Pereira, as a member of the West Coast Hockey League (WCHL).

The Steelheads are named for a species of seagoing rainbow trout native to Idaho streams and rivers and popular with local anglers.

Despite this, the original primary and alternate logos consisted of a puck bouncing off a hockey mask and the state of Idaho respectively.

The Steelheads began play as part of a four-team expansion in the West Coast Hockey League in 1997, along with the Tacoma Sabercats, Phoenix Mustangs and Tucson Gila Monsters, which have all since ceased operations.

During its inaugural season, in addition to its WCHL schedule the Steelheads played two exhibition games in Boise against the Russian Super League team CKA-Amur (now Amur Khabarovsk).

The Steelheads, along with several other WCHL-affiliated teams – namely the Alaska Aces, Bakersfield Condors, Fresno Falcons, Las Vegas Wranglers, Long Beach Ice Dogs and San Diego Gulls – became ECHL members beginning with the 2003–04 season.

Later that year the Steelheads won their second Kelly Cup by defeating the Stockton Thunder, Las Vegas Wranglers and Alaska Aces in the playoffs, and ultimately the Dayton Bombers in the league finals.

They received a bye in the first round of the 2010 Kelly Cup Playoffs before sweeping the Utah Grizzlies in the conference semifinals and beating the Stockton Thunder in six games to win the National Conference championship to advance to their third Kelly Cup finals since joining the league in 2003.

Laxdal left the team after the 2009–10 season to accept the head coaching position with the major junior Edmonton Oil Kings.

In June 2012, the Steelheads named SPHL Augusta RiverHawks head coach Brad Ralph as Sauter's replacement.

[7] In Ralph's first season in Idaho the Steelheads advanced to the Western Conference finals, but were defeated by the Stockton Thunder in five games.

Philippe Desrosiers appeared in a team high 31 games in goal for the Steelheads with a 15–7–6 record with a 2.34 GAA and 2 shutouts.

The team's former rivals include the refugees of the old WCHL: the Alaska Aces, Fresno Falcons, and Bakersfield Condors.

Until their 2014 suspension of operations,[20] the Steelheads also had a rivalry with the Las Vegas Wranglers due to their frequent playoff meetings.