The area that would become the town was first settled by outsiders after 1827. The town of Red House was formed in 1869 from part of the town of Salamanca. It was named for its famous landmark, the Red House, a Civil War-era domicile located at the confluence of a small creek (later named Red House Creek) with the Allegheny River. The house was remarkable for its strange, dark crimson coloring and was originally constructed as a resting house for those traveling along the river.