The first settler, Jon Harder, arrived in the 1890s. The town was platted by Hardersburg Townsite & Improvement Company in June of 1901 as Hardersburg. The town was at first called Hardersburg but the post office department objected to the length of the name. The name was later changed to the Native American name, which means “…hole in the ground…” and refers to nearby deep springs. Another translation of the Native American name is said to be “…coyote water…” which relates to an Native American legend connected to the springs.

Near Kahlotus is the Devil’s Monument, an immense dome of lava in Devil’s Canyon, a branch of the coulee. Devils canyon connects via a narrow, steeply sided canyon to the Snake River and the Lower Monumental Dam.