Many native tribes have inhabited the area along Green Bay that is today Escanaba, including the Noquet, Potawatomi, Menominee and Ojibwe. "Escanaba" was the name of an Ojibwe village in this area in the early 19th century. The Ojibwa are one of the Anishinaabe, Algonquian-speaking tribes who settled and flourished around the Great Lakes. The word "Escanaba" roughly translates from Ojibwe and other regional Algonquian languages to "land of the red buck", although some people maintain that it refers to "flat rock".
As a European-American settlement, Escanaba was founded in 1863 as a port town by surveyor Eli P. Royce. Early industry was the processing and harvesting of lumber, dominated in this area by Daniel Wells Jr., Jefferson Sinclair, and Nelson Ludington. Ludington later moved his headquarters to Chicago, where he also entered banking. I. Stephenson established a successor lumber company in the area and also became a capitalist.
Before the war, iron ore was being mined from the Marquette Iron Range, which shipped out on barges from Escanaba. By the time of the American Civil War, this port was important to the Union as a shipping point for these ores, in addition to lumber. The Menominee Range and Gogebic Range of Michigan became important for iron ore after the war, in the 1880s. In 1994, Michigan produced about 25% of the iron ore nationally. Initially lumber was still integral to shipbuilding, and supported the construction of houses in cities throughout the developing Midwest. Iron ore supported industrialization, and became part of steel and other industries in the Midwest. As shipping increased, a lighthouse was needed to warn of a sand shoals in Little Bay de Noc, which extended from Sand Point, a sandspit located just south of and adjacent to the harbor area. The United States Lighthouse Service approved construction of the Sand Point Lighthouse at a cost of $11,000. Construction began in the fall of 1867 and was completed in early spring 1868.
Until 2017, Escanaba continued to be an important shipping point for iron ore to other Great Lakes ports, especially south to Chicago and northern Indiana. The local paper mill, for many years owned by Mead Corporation's Publishing Paper Division, was operated by the Verso Corporation until 2022 when it was sold to Billerud. Located on the outskirts of the city alongside the Escanaba River, in 2018 the mill was Escanaba's largest employer.