"Manitouwadj," an Ojibway word meaning "Cave of the Great Spirit", Gives one the key to early inhabitants of the area. The nomadic Ojibway Indians left a distinct impression on the culture of Manitouwadge as well as two legends as to how the town came to be known as such.

According to the first, The Great Spirit Manitou was sailing down a stream in a canoe that had a rudder attached. He noticed a huge Canada goose flying overhead and being hungry, quickly drew an arrow from his quiver, put it in his bow and shot the bird. The giant bird fell, tearing the rudder from the canoe. When the waters settled, the giant bird, a large fish and the rudder of the canoe were lying on the land. Manitou feasted that night and in the morning, was so filled with a sense of well-being he at once set about creating the area of Manitouwadj. Into the depressions formed in the ground by the huge Canada goose, the large fish, the rudder from his canoe and his moccasined feet, he poured water to make lakes. Hills were formed from the ground pushed up in the commotion. Copper rings around the arrow shaft were used to form ore bodies. The wood shaft of the arrow was made into deciduous trees, while the rudder wood formed the coniferous trees. To commemorate his stay, the mighty Manitou named the place Manitouwadge, meaning "Lodge of the Great Spirit".

Another legend, dating back to the 1800s, suggests copper ore was first found at the end of the last lake in the chain. Copper was extracted albeit in crude fashion by settlements of Ojibway Indians, camped along the North Shore of Lake Superior.

A young Indian brave ventured into a previously undiscovered opening in the hillside, while portaging the area. Intrigued, he shouted and was frightened to hear his voice echo back to him. He hastily returned to his companions to tell of his discovery of the "Wadge" (cave) of the Great Spirit, Manitou. Thus the lake became known to the Indians as Manitouwadge, Cave of the Great Spirit.