Madeline Island is the traditional spiritual center of the Lake Superior Chippewa, and was one of the earliest settlements in the area. An Anishinaabe legend says that Great Spirit Gitche Manitou told the people to travel west to the place where the "food grows upon the water", which led them to the wild rice that grew in the marshes in nearby Chequamegon Bay. Madeline Island was also the home of Chief Buffalo, who was instrumental in resisting the efforts of the U.S. Government to remove the Chippewa and in securing permanent reservations under the Treaty of La Pointe of 1854 that remain today. The bulk of the Ojibway on Madeline Island resettled to the Bad River Reservation east of Ashland, however, Chief Buffalo was granted a tract for his family on the mainland just west of Madeline Island in what is now known as the Red Cliff Indian Reservation.
The island was originally called Mooningwanekaaning ("The Home of the Golden Breasted Woodpecker"). The first white settlers were French fur traders, who in 1693 established the fort that eventually became the community of La Pointe. In the 19th century La Pointe became the site of an important post of the American Fur Company under Michel Cadotte whose wife Ikwesewe (Madeline) is the island's namesake. The island's fur trading history has been preserved in the Madeline Island Historical Museum.