The name is derived from the wild carrots growing along the river, which in 1911 the first homesteaders crossed and then settled on the north bank. Settlement was slow until the CNR railroad reached the Carrot River site in 1931 bringing southern farmers seeking new locations away from the great drought on the prairies.
Carrot River became a Village in 1941 and incorporated as a Town on April 01, 1948. The 1960s brought rapid change through implementation of modern facilities to Town and farms alike. Electricity, natural gas, water and sewer systems, paved highways, telephones and modern homes all contributed to living conditions equal to anywhere.