William C. McKay, grandson of John Jacob Astor's partner Alexander MacKay, says that the origin of the name is from the powdery and sandy soil along the shores of the river, from the Chinook Jargon polalle illahe.

The river's main stem begins in Sumpter, where McCully Fork, Cracker Creek and several smaller tributaries join, and flows east-southeast through the tailings of past dredge mining and into Phillips Reservoir.

After exiting Phillips Reservoir, the river continues east for about 7 miles (11 km) before turning sharply north through the Bowen Valley and Baker City, Oregon.

[7] Beaver (Castor canadensis) populations are increasing along the river, with an excellent viewing area just off Oregon Route 7 below Mason Dam, about 14 miles (23 km) from Baker City.

[8] The Powder River was once an important spawning stream for Chinook salmon (Oncorhynchus tshawytscha) and steelhead trout (Oncorhyncus mykiss) coming from the Pacific Ocean.