Before the arrival of European settlers, members of the Odawa people lived between the lakes they called Wahbekaness and Wahbekanetta (now named Duck Lake and Green Lake, respectively). Beginning in the late 19th century, European settlers began logging and fishing industries in the area, and founded the small village of Wylie, one mile south of present-day Interlochen.
Because of logging, the Manistee and North-Eastern Railroad (owned by the Buckley and Douglas Lumber Company of Manistee) extended its line north from Nessen City and arrived between the lakes in the fall of 1889. Similarly, the Chicago and West Michigan Railway extended its line north from Baldwin on its way to Traverse City in 1890.
The two lines crossed in current-day downtown Interlochen where a depot and interlocking tower were located. The original townsite, however, was platted just south of the depot along either side of the M&NE rail line in late 1889 or early 1890, with the business district centering on the now-former M-137 and Riley Rd/10th Street.
As the lumber industry grew, the area became more deforested. However, it was predicted from the beginning that the area would become a popular summer resort, and so Buckley and Douglas set aside 186 acres of virgin pines between Duck and Green lakes for preservation