The Ojibwe originally called the lake Onamanii-zaaga'iganiing (occasionally anglicized as Nee-Man-Nee), which means “the evening sun tinting the water a reddish color”.

In the spring of 2005, Lake Vermilion was host to the annual Minnesota Governor’s Fishing Opener Weekend.

Tourists are drawn by Lake Vermilion's reputation as a fishing destination, as well as its setting in the northern Minnesota wilderness.

[9] The Bois Forte Band of Chippewa has a small reservation on the lake, upon which is located Fortune Bay Resort and Casino.

The Stuntz Bay Boathouse Historic District was constructed in the first half of the 20th century by employees of the adjacent Soudan Iron Mine on the shores of the lake.