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Initially called "Kootenay Dominion Park", the park was created in 1920 as part of an agreement between the province of British Columbia and the Canadian federal government to build a highway in exchange for title to a strip of land, approximately 8 km (5.0 mi) on either side of the 94 km route, the Banff–Windermere Highway, to be used solely for park purposes.

While the park is open all year, the major tourist season lasts from June to September.

Just outside the park's southwestern entrance is the town of Radium Hot Springs.

The town is named for the odourless hot springs located just inside the park boundary.

Archaeological evidence suggests humans have been either traveling through, or temporarily residing in, the area for about 10,000 years.

Pictographs found in the hot spring caves indicate that it was the Ktunaxa people who first made more permanent use of the area, particularly the hot springs, several hundred years ago.

Roland Stuart, who had acquired the springs through a 160-acre crown grant, purchased an additional 455 acres in the vicinity of the springs as the area became accessible by the Kootenay Central Railway.

Jasper National Park, Mount Robson Provincial Park and Hamber Provincial Park make up the remainder of the World Heritage Site but do not share a boundary with Kootenay National Park.In May 1916 Minister William James Roche began negotiations, and the subsequent Minister of the Interior agreed with the provincial counterparts to the Banff-Windermere Agreement, that the federal government would complete the road within 4 years of the end of war, and maintain it thereafter, in exchange for the agreed upon land to be used for park purposes and a resolution to jurisdictional matters in the other federal parks in BC.The agreement was signed on March 12, 1919, and the federal government took ownership of the land in July 1919.While they intended on bottling the spring water, its remote location prevented such development and Stuart offered to sell the property in 1909 to the Canadian Pacific Railway Company for 00.Though the offer was not accepted, railway engineer Robert Randolph Bruce recognized the potential for a road through the area and advocated for it in 1910 with CPR president Thomas Shaughnessy and Premier Richard Mc Bride, as a commercial link for the province to Calgary and eastern Canada.

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To get the British Columbia section completed, Bruce traveled to Ottawa to pitch the idea that they designate the western end of the route, through the Rockies Mountains, a national park so that road could be funded as a park improvement.

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