The pass was named for James J. Hagerman, builder of the Colorado Midland Railroad. The Colorado Midland railroad crossed the continental divide through one of two tunnels (initially the Hagerman Tunnel (1877), later the Busk-Ivanhoe Tunnel (1893) at lower altitude) near the top of Hagerman pass. The latter tunnel now serves as a water diversion tunnel draining Ivanhoe Lake on the west side of the pass into the Arkansas River basin.