Stephen was founded between 1875 through 1878. Stephen was the first town founded in Marshall County. Nestled in the Red River Valley in Northwest Minnesota, is this city of approximately 700 residents, located on Highway 75, 40 miles south of the Canadian border and 15 miles east of North Dakota. The first hotel in Stephen was The Holter House that was built on the present site of the Farmers State Bank. One of the largest buildings was constructed on Atlantic Avenue in 1882 by four Chicagoans, co-partners Charles Larson, Carl Julian, John Lundin, and Hans Bakke. A few years later William Merdink bought the general merchandise store and continued in the mercantile business for many years. In 1883, Hanna moved his store merchandise from the south side of the river.
Stephen is nicknamed the "City Surrounded by Gold". This name reflects the thousands of acres of crop fields that surround the city in the Red River Valley. The bridge in South Stephen is the true "Golden Gate Bridge". The community of Stephen is spread out. Riverside Golf Course is a 9 hole course on the west of town in which the Tamarac river runs through. The south part of town is known to locals as South Stephen in which Pioneer Park resides. Once a flood plain in the spring, the park contains a dike to prevent South Stephen from flooding. Pioneer Park contains a tennis court in the summer and is converted into a hockey rink in the winter. The historic Potato Patch Road starts in South Stephen and circles the golf course ending at mainstreet. The central part of the town comprises downtown Stephen, churches, and the high school. The Stephen Dam is located next to the golf course which is a hot spot for fishing for walleye, northern pike, and catfish. During late July of each year, the city holds the annual Summerfest. This includes a parade, games for children, and a night out for adults. The Stephen Curling Club resides in the northwest side of town and holds league in the winter months. The swimming pool is located across from the school in Westside Stephen. Stephen has two bars which are the Stephen American Legion and the Northern Lites Lounge. The tallest building in Stephen is the north grain elevator. It is made primarily of cement and gives Stephen its "skyline". It can be seen from fifteen miles away. Stephen airport is located on the north side of town. It is used for crop spray planes and is very busy in the summer. Downtown Stephen contains many businesses from banks, department stores, insurance agencies, grocery store, and more. The South Stephen Hill leads sledders down onto the frozen mighty Tamarac River.
The high school is consolidated with the community of Argyle, MN to form the Stephen Argyle Central Storm. The school and communities are known for their successful football teams. The school has 6 state titles. Also, Stephen High School won a state football championship back in 1992. During the 2004 Minnesota State Prep Bowl, the 2003 state winning team was awarded with the best 9-Man team to have ever played in Minnesota. The basketball gym is Kimball Auditorium, which is named after a former superintendent of Stephen Public Schools.