[4] In 1900, the Bureau of Colonization of the Ontario Department of Agriculture sent parties to survey the region north of the Canadian Pacific Railway between the Quebec border and Lake Nipigon.

Their main interest was to seek out and delimit areas for further agricultural settlements that would give Ontario a new farming frontier to offset the attraction of the western prairies.

Survey parties were sent out to explore, document and report back to the Province on the various resources of water power, timber, etc., that might be available for exploitation.

No roads existed, but northern Cree Indians and fur traders had used the local rivers connecting to James Bay for centuries.

Also in the heart of Canada's boreal forest, the region is drained by rivers running north to James Bay.

It was not until the start of pulp and paper milling operations in the 1920s that Kapuskasing began to develop as an organized community.

The new Spruce Falls Company Ltd. began the development of the first pulp mill in Kapuskasing under the direction of F.J. Sensenbrenner, a Vice President of Kimberly Clark Corporation for the next 20 years.

In 1923, a water storage and hydro electric dam was built by Morrow and Beatty Ltd. of Peterborough at Spruce Falls.

In 1926, the Spruce Falls Power and Paper Company was incorporated under joint ownership of Kimberly-Clark and The New York Times.

The new company negotiated two additional hydro power leases to the north on the Mattagami River at Smoky Falls and Devils Rapids.

Work to build a 550 ton/day paper mill at Kapuskasing, a 75,000 HP hydro generating station at Smoky Falls and a 80 kilometres (50 mi) railway and power line connecting the two got underway in the spring of 1926.

The company became known locally as "Uncle Spruce" in affectionate reference to the steady work and benefits provided to this distinct northern community for many decades.

During World War I, the town was the site of one of the largest internment camps in Canada, at Bunk Houses in Kapuskasing from December 1914 to February 1920.

[13] The camp held over 1,300 German, Austrian, and Turkish prisoners, though originally the majority were civilian internees of Ukrainian descent who had emigrated from the provinces of Bukovina and Galicia, their homeland, which at the time were part of the Austro-Hungarian Empire, in the first wave of Ukrainian emigration to Canada prior to 1914.

Prisoners were employed in the construction of buildings and clearing of land for a government experimental farm on the west side of the Kapuskasing River.

Prisoners who attempted to escape into the bush were turned back by endless muskeg and clouds of mosquitoes or minus-40 degree temperatures in winter.

[14] Despite years of grief over the combat death of his brother, Captain Kirkconnell later wrote, "Generally speaking, I could feel little animus against our German prisoners.

"[15] A small cemetery is all that remains of the internment camp near the Kapuskasing Airport where victims of the 1918 influenza epidemic were laid to rest.

During World War II, Kapuskasing was one of five Northern Ontario radar bases that were set up to watch for potential attacks on the Soo Locks in Sault Ste.

Kapuskasing Airport was once a refueling stop for Trans-Canada Air Lines flights in the days before jet airliners.

The former Spruce Falls, now GreenFirst Forest Products, had purchased the site from Rayonier Advanced Materials (RYAM) in 2021.

The pulp and paper mill is the town's major employer, soon to be replaced by the Ontario Power Generation's Smoky Falls Dam reconstruction site.

General Motors Canada operates the GM Cold Weather Development Centre in Kapuskasing.

Guy Bourgouin, member of Ontario's New Democratic Party, is the town's MPP and represents the provincial Mushkegowuk—James Bay riding.

[24] Kapuskasing's locally originated media include English-language commercial radio station CKAP (branded as Moose FM), French-language community radio station CKGN, and the English-language Kapuskasing Northern Times and bilingual Le/The Weekender community newspapers and the French newspaper L'Horizon.

The community receives its only aerial television coverage from CITO-TV-1 channel 10, a repeater of CTV outlet CITO-TV Timmins.

EMS services are provided by Sensenbrenner Hospital, which is managed by the Northeastern Ontario Medical Education Corporation (NOMEC).

Canadian singer-songwriter Justin Rutledge has a song called "Kapuskasing Coffee" on his album Valleyheart.