[6] The city lies in the middle of Red Lake Falls Township, from which it was separated when incorporated as a village in 1881.

A French Canadian fur trader, Jean Baptiste Cadotte, partner of the noted British-Canadian fur trader, Alexander Henry the elder, established the post as part of a strategy to ward off Hudson's Bay Company intrusion into the Red River Valley.

The famous Canadian explorer David Thompson took shelter from a storm in Cadotte's cabin here in March 1798.

[7] The post was abandoned early in the 1800s, as British fur traders withdrew from United States territory.

The surrounding territory was homesteaded by French-American settlers led by Pierre Bottineau, who were relocating via ox cart from their temporary stopping points in Ramsey and Hennepin Counties, Minnesota, in 1876.

In 1878, Earnest Buse and his partner, Otto Kankel, established a flour mill at the confluence of the two rivers.

The town of Red Lake Falls soon after was platted by Mr. Buse, who then moved on to other environs.

The last significant historic event in Red Lake Falls occurred on August 27, 1927, when the famous aviator Charles Lindbergh and his wife landed at the nearby airport during a barnstorming trip through the Upper Midwest and were taken on automobile rides to Huot and Crookston.

According to the United States Census Bureau, the city has a total area of 2.03 square miles (5.26 km2), all land.