The city was built after the discovery of the Marquette Iron Range during the early 19th century. The Jackson Mine was established in 1845 to mine the ore for shipment to iron forges; the first such forge to operate in the Lake Superior basin was set up in Negaunee during this period. In 1858, the community was given a post office. In 1865, Negaunee was incorporated as a village and reincorporated as a city in 1873. As mining operations expanded, many immigrants helped settle the area, bringing with them rich traditions that remain today. Due to extensive underground mining, roughly half the city was abandoned in the early 20th century due to risk of cave-in. The city closed its trolley system in 1927. The Jackson Mine ceased all operations within the city limits in the 1940s.
On January 16, 1952, Negaunee became the smallest city to ever host an NBA game. The Milwaukee Hawks beat the Baltimore Bullets 77–71. Baltimore's Don Barksdale led all scorers with 24 points. Negaunee is still the smallest city to ever host any of the four major North American professional sports.