The Town of Spirit River is named after a small stream which runs about 2.5 miles south of the townsite. The Cree name is "Chepe Sepe", meaning Ghost River.

The community began as a townsite for two trading posts belonging to the Hudson's Bay Company and Revilion Freres. The posts continued doing business in the community until 1919.

Since the arrival of the railway in 1916, Spirit River has served as a busy railway terminal and shipping point for a large area west of the town.

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