Built on the south shore of Fox Lake, the city that is its namesake was Dodge County's first settlement. Established in 1838, Fox Lake was a key stop between Fort Winnebago in Portage and Fort Howard in Green Bay.The first inhabitants of Fox Lake were Winnebago Indians who named the area around the 2,625-acre lake "Hosh-a-rac-ah-tah", meaning "good land". Later, it came to be called Waushara, meaning "fish spear". Finally, it came to be called Fox Lake. The origin of the name is attributed to the shape of the lake. However, an account of a harrowing tale of a lost trapper's survival and eventual rescue by an old man from the Winnebago tribe named Big Fox is cited as how the lake and city got their name. This story was published in the 1880 Columbia County History compiled by Fox Lake librarian Julie Fleming.

Knowledge of the history and archaeology of Fox Lake was enriched in 1983 when the Fox Lake Inland Lake Rehabilitation and Protection District installed a sewer system. Workers uncovered one of the Wisconsin's largest archaeological discoveries on Elmwood Island in Fox Lake.The Details of the dig and artifacts were painstakingly catalogued and preserved. The Fox Lake Historical Museum, in the old train depot, displays the findings from the archaeological dig as well as other local history.