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Formerly called Clifton, it was a supply point for summer colonists and for fishing and hunting trips in season. It was also the center of dairy farms and poultry ranches. The highway strikes overland east of Belfair through stands of alder and second-growth timber. Here and there, a gnarled tree left by loggers rises over the tops of the second growth.

The town was platted as Clifton in 1888. When the Navy Yard Highway between Shelton and Bremerton was built in 1918 Clifton was bypassed. The town was re-established on the new highway, but postal officials proposed a name change. Residents coined the present name. In 1934, when the highway route was altered, Belfair was again bypassed, and was moved to a location on the highway. The Native American name was Du-hlay-lip, meaning head of the bay.