Prior to European settlement, the area was inhabited by aboriginal tribes (Blackfoot, Plains Cree, and Stoney) and later by Métis and fur traders. The city was named for the Red Deer River which runs through it. The first major road from Fort Calgary to Fort Edmonton was called the Calgary and Edmonton Trail (abbreviated to C&E Trail) and it crossed the Red Deer River near the present city at Red Deer Crossing.
In 1882 a trading post was established at Red Deer Crossing. During the Riel Rebellion of 1885, the Canadian militia constructed Fort Normandeau at the Crossing which was later taken over by the North West Mounted Police who used it until 1893.
By 1891 the Calgary and Edmonton Railway laid track east of the Crossing at the present site of the city. In 1901 Red Deer was incorporated as a town with a population of 343. In 1907 it became a major divisional point for the Canadian Pacific Railway. In 1911 the Alberta Central Railway and the Canadian Northern Railway entered the town. In 1913 Red Deer was incorporated as a city with a population of nearly 2800. In 1922, the province established in Red Deer an institution for the care of the mentally handicapped, currently called the Michener Centre.
In the late 1950s, Red Deer claimed to be the fastest growing city in Canada.