Canadian, on U.S. highways 60 and 83 in western Hemphill County, has been the county seat since its founding in 1887. In the spring of that year E. P. Purcell and O. H. Nelson, who headed the Kansas Railway Townsite Company, laid out the 240-acre townsite, which is on the south bank of the Canadian River near its junction with Red Deer Creek. By summer the Southern Kansas Railway had completed a bridge across the river from the settlement of Clear Creek, or Hogtown. As a result, residents of Hogtown moved their homes and businesses to Canadian. Soon the temporary tent city gave way to more permanent structures, as the townsite company's advertisements attracted more prospective settlers and businesses. Nelson Peet established the first hotel, the Log Cabin, and a post office was opened in August. On July 4, 1888, Canadian's reputation as a rodeo (see RODEOS) town began when the annual Cowboys' Reunion staged a commercial rodeo, one of the first in Texas. The event has been an annual custom ever since. Baptists, Methodists, the Christian Church, the Church of Christ, and other Christian communions soon established churches in Canadian.
By 1900 the incorporated town was a major shipping center with railroad division headquarters and roundhouses, cotton gins, elevators, banks, a public school, and a private academy, as well as various stores and other small businesses. Canadian also had as many as thirteen saloons before the county voted to go dry in 1903. Since then, the Woman's Christian Temperance Union has had an active chapter in Canadian; the old WCTU building also houses the city library. Canadian has had seven newspapers: the Free Press (1887–88), the Crescent (1888–93), the Record (1893-), the Enterprise (1891–1912), the Advertiser (which later became the Hemphill County News, 1938–71), the Sand Burr (1933–49), and the short-lived Monday Morning News (1916).
Among the prominent businessmen and civic leaders, some of whose descendants still make Canadian their home, were George and John J. Gerlach, Harvey E. Hoover, Edward H. Brainard, and Nahim Abraham, who immigrated from Lebanon. Temple Lea Houston lived for a time in Canadian, as did the colorful rancher and lawman George W. Arrington.
In the early 1950s Canadian lost its railroad roundhouses and division headquarters as a result of reorganization by the Santa Fe. Nevertheless, it continued to thrive on ranching and farming, as well as oil and gas production. The population increased from 2,671 in 1950 to 3,491 in 1980. In 1990 it was 2,417, and in 2000 it was 2,233. In addition to the annual rodeo, the annual Midsummer Music Festival in August and the Autumn Foliage Tour in October attract visitors. The River Valley Pioneer Museum is in Canadian. Lake Marvin and the Gene Howe Wildlife Management area are located east of town.