The original settlement on the south side of the Zumbro River dates back to 1857. A grist-mill dam built in 1866 created the falls for which the town is named. Numerous floods have swept away all but a few traces of the dam. Frequent flooding and a tornado prompted relocation to the north of the river. A railroad arrived in the relocated settlement in 1881. The city was incorporated in 1898.
In September 2010, the city was flooded again, and evacuated. Many buildings were destroyed or damaged.