In 1833 Thomas Dixon became the first settler in the Kappa area. Over the next few years, other settlers moved in around the area, and eventually a railroad was built through the area. On May 23, 1853, rail service began, and postal service began. The first postmaster, William Jones, appointed the name Montrose, but the Illinois Central Railroad preferred Kappa. Kappa is the tenth letter in the Greek alphabet, and was applied to the town because it was the tenth town between Dunleith (modern-day East Dubuque, Illinois) and Bloomington.
Since its inception, the railroad line from East Dubuque to Bloomington has been decommissioned. In the early 1900s, SBI Route 2 was founded, and then changed to U.S. Highway 51. U.S. 51 now bypasses the town to the west, leaving Illinois Route 251 as the main north-south road through town.