The community owes its name to John Finnegan (1842–1924), an Irish-Canadian settler. John moved to Gleichen from Ontario with his wife in 1890 before homesteading along the banks of the Red Deer River. The identity of Finnegan has always centered on its river crossing. In the early 20th century, travel across the Red Deer River in this region was difficult and often dangerous due to fluctuating water levels and steep riverbanks. John Finnegan established and initially operated a private ferry to transport settlers, livestock, and supplies across the river.

The ferry was later taken over by the provincial government (now operated by Alberta Transportation). It serves as a vital north-south link for Alberta Highway 862 across the Red Deer River.

Like many homesteading stops along Alberta’s river valleys, Finnegan served as a gathering point for local ranchers, farmers, and travelers moving between the prairies to the north and south. While the settlement itself remained small and never incorporated into a full town, it retained a post office and a identity as a landmark crossing in the sparsely populated Badlands region. The Post office opened on August 1, 1930.