[5] It was named in 1841 by Charles Wilkes in honor of Captain William Henry McNeill of the Hudson's Bay Company,[1] who greeted Wilkes upon the arrival of the United States Exploring Expedition at Fort Nisqually in southern Puget Sound.

In 1847, during the British map reorganization project, Henry Kellett restored the earlier name McNeil.

The federal penitentiary's most famous inmates were probably Robert Stroud, the "Birdman of Alcatraz", who was held there from 1909 to 1912; Charles Manson, who before inspiring Helter Skelter in killing Sharon Tate and others in 1969, was an inmate from 1961 to 1966 for trying to cash a forged government check; and Alvin Karpis, who was transferred to McNeil Island in 1962, from Alcatraz as a result of its impending closure, to complete his sentence.

Karpis, who was labeled the FBI's Public Enemy #1 at the time of his capture in 1936, was the point man for the Barker–Karpis gang that committed kidnappings and numerous bank robberies while operating throughout the Midwest in the early 1930s.

During World War II, eighty-five Japanese Americans who had resisted the draft to protest their wartime confinement, including civil rights activist Gordon Hirabayashi, were sentenced to prison terms at McNeil; all were pardoned by President Harry S. Truman in 1947.

[11] A video posted to YouTube channel Vagrant Holiday in 2020 shows him exploring the island along with commentary.

[15] At the time of its closing, McNeil was the only prison left in North America that was accessible only by boat or air.

At one point, the prison was almost self-sustaining in terms of agricultural products, including its dairy farm; all these elements were manned and operated by the inmates.

[18] Separate federal or state-owned ferries under the prison administration connected McNeil Island with Steilacoom.