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Named for William Packwood, who came from Virginia to the Pacific Coast in 1844 and took a donation land claim in Thurston County in the fifties. He gained considerable reputation as an explorer, and as late as 1889 was a familiar figure along the trails with his string of pack horses. It is said that he would guide a party anywhere in the region for $2.50.

The town of Packwood, lying between the Snoqualmie and the Columbia National Forests, is the outfitting center for the Randle and Goat Rocks Recreation Areas. Through the 1940s, an important social event was the annual spring dance given in the big hall as a farewell celebration for the fire lookouts, the foresters, and the game wardens, just prior to their departure for the forests for the summer/fall season. People come from the far end of the valley for the occasion. To the music of a four-piece orchestra of piano, fiddle, bass viol, and drum, punctured with laughter, yells, “stomping” of feet, and an occasional shot from the pistol of an over-exuberant hillman, the crowd dances until dawn.

The forest surrounding Packwood is now known as the Gifford Pinchot National Forest. Packwood is located between Mount Rainier National Park to the north and Mt. Saint Helens National Volcanic Monument to the south.

The town was called Sulphur Springs from 1890 to 1987. Then it was called Lewis: Lewis was a town on the Cowlitz River in the west central portion of Lewis County. A post office was established in August of 1896 with the name Sulphur Springs for a small spring in the vicinity. When moved in 1911 the name was changed for John Lewis, a member of the Mitchell, Lewis and Staver Company of Portland who was also president of the Valley Development Company then working on the Packwood power project. Then after 1930 the name was changed to Packwood.