Before the arrival of European explorers, the area around present-day, Prince Rupert had been inhabited by the Tsimishian people for more than 10,000 years. There are currently about 10,000 Tsimishians left, most of which live near the Pacific Coast along northern British Columbia and southern Alaska.

The city of Prince Rupert was incorporated on March 10, 1910; the name was chosen to honour Prince Rupert of England, who was the first governor of the Hudson's Bay Company when it was founded in 1670. The city's founder was the general manager of the Grand Trunk Pacific Railway, Charles Melville Hays.  It was supposed to be the western terminus of the transcontinental railroad, though the final stretch of rails connecting Prince Rupert and the city of Terrace 100 miles to the east was not completed until after World War II. Once the rail was completed, Prince Rupert experienced an economic boom. Fishing and forestry became the most important industries, as the area was abundant in natural resources, especially halibut. A pulp mill set up on nearby Watson Island also served as a key player in regional economy during the second half of the 20th century, though this company has since shut down. However, beginning in the 1980s, the fishing industry in Prince Rupert began to decline, and the city experienced significant economic decline. In the last few years, however, several renovation and development projects have been started, and the increasing tourism industry has brightened the city’s economic prospects.