The name "Athabasca" is of Cree origin. Early spellings: Araubaska (Peter Pond) and Athapescow (Arrowsmith). Various interpretations of the meaning: "where there are reeds" (Douglas); "meeting place of many waters" (Voorhis). The town was first called Athabasca Landing about 1889; the name changed to Athabaska in 1904, and then changed back to Athabasca in 1948. The provisional district of Athabasca was established in 1882, encompassing the northern parts of modern Alberta and Saskatchewan.

Unlike many other towns in Alberta, Athabasca predates the Canadian Pacific Railway. Athabasca lies on a southern protrusion of the Athabasca River. During the fur trade era, when rivers were the principal means of transportation, the Athabasca–Edmonton trail connected two different drainage basins. The Athabasca River flows north and is part of the Mackenzie River watershed, which leads to the Arctic Ocean. Edmonton lies across a height-of-land on the North Saskatchewan River in the Nelson River drainage basin, which empties into Hudson Bay. Edmonton was in Rupert's Land, but Athabasca was not. Athabasca was the terminus of the Edmonton to Athabasca Landing trail, which allowed goods to be portaged back and forth between river systems. Once agricultural settlement occurred, the trail continued to serve a similar purpose. Eventually, road and rail links were established following the same path.

In 1876, the Hudson's Bay Company (HBC) built a warehouse at Athabasca Landing to facilitate the supply route to Lesser Slave Lake. The site was expanded in 1886 with a store, house, and new larger warehouse, and it became a full trading post. Further expansion included a stable, powder magazine, workshop and storeman's house. By 1889, it had become the HBC's headquarters of northern transport.

The North-West Mounted Police stationed officers at Athabasca Landing for the summer of 1892, due to increased traffic on the trail. Inspector D.M. Howard, and eight constables, built a permanent post in 1893.

In 1912, the HBC had the steamers Slave River and Athabasca River built at Athabasca Landing for travel on the Athabasca and Peace Rivers. A massive forest fire in August 1913 destroyed a large portion of the town, including 30 businesses. There was no loss of life. Rebuilding of the town began immediately. The HBC post was rebuilt in 1914 and operated until 1924.