Arlee was named after the Salish leader Arlee.[8] In October 1873, he moved a small group of his people from the Bitterroot Valley, which was designated a "conditional reservation" in the 1855 Hellgate Treaty, to the Jocko Agency[9] (later Flathead Indian Agency) located a few miles south of the current town of Arlee. This forced move stemmed from the efforts of a congressional delegation led by future president James Garfield to negotiate Salish removal from the Bitterroot Valley.[10]

The town and post office were established in 1885.[3]

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