The town takes its name from the nearby falls of the Snake River, a famous landmark for fur trappers and early western travelers. The Oregon Trail passed close to the falls, which were named in contrast to "Canadian Falls," now known as Shoshone Falls, 95 miles downstream. The town of Amierican Falls was founded when the railroad arrived in 1882 and served a ranching area. An important power dam was built in 1902. When the present large irrigation dam was built in 1925-1927, the town had to be moved out of the reservoir area.