Lester was founded in 1891 as the logging camp of Deans, named after the owner of Dean's Lumber Company. In 1886, the Northern Pacific Railway constructed a large depot, roundhouse, coal dock and other steam locomotive support facilities for the Stampede Pass railway; Lester was at the foot of the railroad's maximum grade. The town was also renamed Lester in honor of Northern Pacific telegraph operator Lester Hansaker.