After the discovery of gold in confederate Gulch, freighters established road between Helena and Diamond City.  The Missouri River was a hindrance to travelers until John Oakes built a ferry in Black Rock Canyon in 1865.  A small settlement, Canyon Ferry flourished at the ferry crossing.  Its hotel, saloon, stage station, stable and dry goods store served local residents and many travelers.  In 1898 Samuel Hausers Helena Water and Electrical Power Company built a stone dam at the narrow point of the canyon near the canyon ferry.  A little over a half century later, July 1949, the BOR began construction of a massive concrete dam downstream of the original structure.  Since 1954, the dam has produced hydroelectric power and water for irrigation.  It backs up a reservoir for 25 miles in length with 75 miles of shoreline.  Canyon Ferry Reservoir took two years to fill, flooding thousands of acres of farm land, inundating communities of Canyon Ferry and Canton.

Sometime in the early 1960s, people were allowed to lease property from the Bureau of Reclamation. The 10-year renewable leases were supposed to be temporary, with the understanding that eventually the Bureau of Reclamation would need to use the land for new public beaches, boat launches or other recreational activities.

The leaseholders were told they could only build moveable cabins on their sites, yet some eventually evolved into year-round homes. In 1968, a group of cabin owners asked Congress for authorization to allow the land to be sold to them, but that idea was rejected. A similar proposal failed in the mid-1980s.  With the help of former Senators Conrad Burns, Max Baucus and Representative Rick Hill, a bill approving the sale passed in 1998.

Most of the cabin site properties are less than one acre and each cabin owner who purchased the lots paid $11,000 into the Broadwater Canyon Ferry Trust, which was set up to fund recreational improvements at the south end of Canyon Ferry Reservoir, plus an administrative fee was paid to the BOR.

The proceeds from the sales of the $16 million sales was put into the Canyon Ferry trust, with 90 percent being used for hunting, fishing and sporting access in Montana. At least half of that amount is to be spent on the Missouri River watershed, between its headwaters and Holter Reservoir. The other 10 percent is to be used to pay off the outstanding balance for the Bureau of Reclamation on the $37 million construction cost of Canyon Ferry Dam.

Today, the original Canyon Ferry cemetery still stands on what is now know as Cemetery Island and the reservoir that was created provides water for irrigation and recreation for fishermen, boaters and other sportsmen.