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There is evidence of prehistoric occupation by Aleuts and later Russian encampments. Cold Bay's significance to American history began with the Japanese invasion of the Aleutians in World War II. General Simon Bolivar Buckner, Jr. ordered the creation of Fort Randall, an airbase on the shores of Cold Bay, in 1942 as a part of a general expansion of American assets in the Aleutians.

It (along with Otter Point) served as a base for the 11th Air Force to provide protection to the only deep water port in the Aleutians at the time, Dutch Harbor. This protection was necessary when during Yamamoto's Midway Campaign, a diversionary attack was launched against Dutch Harbor. The initial attack was repulsed by the surprise presence of P-40s stationed here.

A second larger attack with its own fighter escort the next day caused minor damage. Later, with the victory in the Pacific, the forces grew to 20,000 troops. The quonset huts used to house this massive encampment still stand around the community. It also was a base of operations for the US Navy with the seaplane tender USS Casco (AVP-12) among the ships based in Cold Bay.In the spring and summer of 1945, Cold Bay was the site of the largest and most ambitious transfer program of World War II, Project Hula, in which the United States transferred dozens of ships and craft to the Soviet Union and trained Soviet personnel in their operation in anticipation of the Soviet Union entering the war against Japan. In later decades, control of the airfield passed to civil authorities, who maintained it as a useful refueling and emergency landing location for great circle flights from the west coast of the United States to East Asia.

A Distant Early Warning Line station established nearby was eventually decommissioned. During the 1980s, deregulation of the airline industry under President Ronald Reagan caused many of the compelling interests supporting the need for the community to evaporate. Today, Cold Bay is still occasionally used for emergency or precautionary landings of commercial flights, and is also a hub for traffic from Anchorage and Seattle to the small communities around it.