Homesteaders began arriving in the Champion area in 1904 and 1905, mainly from the US, Eastern Canada, and Britain. The vast prairie grasslands, cut through by the Little Bow River, provided ideal country for farming and ranching. One of these settlers was Martin G. Clever, who arrived in 1905. He homesteaded on the quarter section of land (160 acres) where the town of Champion is currently located.

The birth of the town was the product of the rapid settlement of the farming and ranching land in the area, but it was also fuelled by the discovery of coal. Homesteader Henry Therriualt opened the first coal mine in the area in 1906, and soon farmers were travelling from neighbouring towns (including Nanton and Stavely) to purchase coal from the Therriault mine. Their journey took them through the Clever homestead to reach the mine, and soon Martin Clever realized the business opportunity that presented itself.

Soon, a country store and a mail route were established. When the storeowner (George Mark) applied to have a government post office located, the burgeoning settlement required a name, and in honour of Martin Clever, Cleverville was christened. Several other thriving businesses soon sprung up, thanks to Martin Clever's offer of the free use of his land: Cleverville was soon home to three general stores, a millinery and linen shop, drug store, butcher shop, blacksmith shop, livery stable, restaurant, two real estate offices, lumber yard, Bank of Hamilton, and doctor's office.

In 1910 the Canadian Pacific Railway (CPR) reached the area, although it became apparent that the rails themselves would not run directly past Cleverville. As a result, the townspeople decided to move, using horses and skids and wagons, all of the buildings of the town to a new location closer to the railway. This new settlement required a new name, and so the relocated Cleverville became the new Village of Champion. Although there are several stories regarding how Champion got its name, the most likely (or at least the one most commonly retold) is that it was named after H.T. Champion, a banker in the Winnipeg firm Alloway and Champion, well-known bankers and loaners throughout the period of settlement of the west. The Alloway and Champion Bank in Winnipeg, Manitoba built in 1905 is on the Registry of Historical Places of Canada. When the town of Champion was relocated, so the story goes, a Winnipeg C.P.R. man named the town after the prominent banker.

The Village of Champion received its charter on May 27, 1911, and the first council meeting was held in June. The growing village required ever more services, and soon Champion was home to its first grain elevator (1912), a telephone office, a school (1913), recreational facilities, and an ever-growing number of retail shops and businesses. A local newspaper, The Champion Chronicle, was also started in 1918 or 1919, and remained in print until 1943.

Agriculture sustained the growth of the Champion area. In 1915 Champion became known as the "Million Bushel Town," as one million bushels of wheat were shipped that year. The Champion Board of Trade was eager to promote the village as a land of opportunity, and in 1913 published the promotional pamphlet "Grain Golden Champion," which was sent around the world to entice settlers and entrepreneurs to move to the area. Claiming that "of all the thriving towns and cities in Western Canada, destined to become the industrial centres of the future, none has established its position, or grown to such importance, in so brief a space of time, as Champion," the Board of Trade invited people to take up opportunities in, of course, grain farming, but also in poultry and stock-raising, railway work, brick- and cement-making, and the development of the natural gas and coal resources in the area.

However, Champion wasn't the only western settlement claiming to be the city of the future, and its population peaked at around 650 people. Nevertheless, Champion continued to mature into a stable and close-knit village. The building of the Community Hall in the late 1920s was a particularly important moment in the history of the town, and the Hall continues to host a variety of community social events to this day.

Along with agriculture, coal mining was a particularly important economic engine for the area. After the initial discovery of coal by Henry Therriault, a number of mines were established. Between 1906 and 1965, when the last coal mine was shut down, there were 58 registered coal mines in the Champion area. In addition to these, there were numerous mines dug into the river or lake beds by families who used coal to heat their homes. Many farmers worked in the mines in the fall and winter months, when farming work was scarce and there was greater demand for coal to heat homes and businesses.

Agriculture remained, however, the most important economic activity for the town and surrounding area. By the mid-1920s there were seven grain elevators, such distinct landmarks for all prairie towns, in Champion. However, as grain handling procedures, as well as world markets, changed throughout the 20th century, Champion's wooden grain elevators, like so many throughout the prairies, became increasingly obsolete. Champion's last elevator was torn down in 2004.