Settled by the Tlingit, the first white people to see the Teslin Lake arrived in the 1870s. Tributaries of the lake were prospected in the following decade. During the Klondike Gold Rush (1897-98), the lake was part of an all-Canadian route to the Klondike. A few temporary settlements were established at its southern end in British Columbia. Tom Smith opened a trading post at the mouth of the Nisutlin River in 1903, but sold it soon afterward. The Whitehorse firm of Taylor and Drury operated it until 1955.
Today the majority of the population is Tlingit. The village has a landing strip and is a service centre for travellers on the Alaska Highway. Its name is derived from the Tlingit expression for “long narrow water,” in reference to the lake.