The first European explorer through the area was John Septimus Roe, the Surveyor General of Western Australia in 1835 en route to Albany from Perth. Between 1835 and 1889 a few settlers eked a simple living by cutting sandalwood and shepherding small flocks of sheep. Land was granted to pastoralists in the Wagin area from the late 1870s onwards.
The town itself came into existence after the construction of the Great Southern Railway which was completed in 1889 with the town originally called Wagin Lake.
In 1898 Wagin was proclaimed a town with the word Lake dropped. A further railway connection with the Collie to Narrogin line at Bowelling was made on 10 December 1918.
A railway was opened to Dumbleyung in 1915,then extended to Lake Grace in 1916.From Lake Grace the line split into two one line to Newdegate was opened in 1922 the second line was extened to Hyden in 1932.