The town was founded in the early 20th century when the forerunner of the Canadian National Railway was built through the area. During World War I it was the site of an internment camp that held over 1,200 prisoners.
After the war, a paper mill was established. The mill, now owned by Tembec, is still the town's lifeblood.
Kapuskasing's locally-originated media include English-language commercial radio station CKAP-FM, branded Moose FM; French-language community radio station CKGN-FM; and the English-language Kapuskasing Northern Times and bilingual Le/The Weekender community newspapers.