The highway is a section of the former Dixie Highway and US 25 in the state. It was first added to the state highway system in 1926 and given its current number in 1973. Previously there were two other highways that carried the M-125 moniker. One in the 1930s ran through the Upper Peninsula near Thompson and a second from 1938 until the mid-1950s was located in Bay County. The current designation was created in 1973 when US 25 was decommissioned in Michigan. The section in downtown Monroe was named what is now a Pure Michigan Byway in 1995.