The community derives its name from Roy "Buster" Dixon. Alongside his wife, Ethel, Dixon operated an early general store and post office for the region during the 1920s and 1930s. The Post office opened on October 1, 1930.

Settlement accelerated significantly in the late 1920s and 1930s as homesteaders arrived to clear the rugged parkland and boreal forest to establish farms. Trading posts and log cabins formed the commercial core of the nascent settlement. In 1930, pioneer Harvey Napper built a notable one-room log store, which was acquired shortly after by Duncan "Mac" McLeod, who ran it for decades.

Education evolved alongside the growing population. The area's first school, the log-built New Prairie School, opened in 1931. By 1940, a more modern one-room school was erected to accommodate younger grades, while the older log school continued to host higher grade levels (Grades 7 through 11) for several years.