A series of early roads across Targhee Pass were constructed in the late 19th century and were replaced by plans for a modern highway following the establishment of West Yellowstone.

US 20 then crosses a plain south of Hebgen Lake and turns southeast to approach the town of West Yellowstone.

The highway passes Yellowstone Airport and enters the town on Firehole Avenue, which it follows until reaching a junction with North Canyon Street.

[11] A year after the establishment of Yellowstone National Park in 1872, a rudimentary and unpaved road to the West Entrance was built by Gilman Sawtell from Virginia City to Madison Canyon.

[12] Plans for a highway crossing Targhee Pass to serve the park and West Yellowstone—established in 1908 as a terminus by the Union Pacific Railroad—were conceived in the early 20th century.

[13][14] The highway would be 16 feet (4.9 m) wide with shoulders and ditches as well as a six percent grade to afford smoother travel than the old, winding road.