Tower was named for Charlemagne Tower, one of the developers of the Vermilion Range and Duluth and Iron Range Railroad. A saw mill was established here in 1882. An Indian settlement was located on nearby Lake Vermilion at Pike Bay, and trading posts of the North West and American Fur Companies were established there in the 19th century. Tower was the terminus of the Vermilion Trail, built from Duluth in 1865 for gold rush prospectors pouring into the region, and during its construction the first evidences of iron ore were found. This ore crusher, used in the search for gold, was one of the first pieces of mining equipment in the area and was found underwater in Trout Creek in 1934. The first iron mine in Minnesota was opened near here in Soudan in 1884. Tower was incorporated as a village in 1884 and as a city in 1889.