Located near the north shore of one of the Belcher Islands, Sanikiluaq is today the southern most settlement in Nunavut. The hamlet was established in 1974, but the Inuit have lived on these islands in the Hudson Bay for centuries. The name of the town itself comes from a legendary Inuk figure of the past. Evidence of the rich history of the island can be found in the presence of Dorset cultural settlements that can be traced as far back as 500BC and which lasted until 1000 AD. Afterwards, Thule culture becomes more common between 1200 and 1500 AD. Thus, the inhabitants of the island have had long experience of meeting the challenges of this unique environment. In the 1800s, one such challenge was the disappearance of the caribou herds that once lived here. An alternative source of warm clothing was to be found in the down of the Eider duck, a bird that nests on the island. The use of Eider down is one aspect of the distinctive history of this region of the north.
The large archipelago, today known as the Belcher islands, first came to the attention of outside explorers in 1610 when Henry Hudson recorded his sighting of them. Yet, it was not until 1840 that an employee of the Hudson Bay Company, Thomas Wiegand, led an expedition to the island from Fort George (Chisasibi). Later in 1915, the filmmaker and anthropologist, Robert Flaherty, became the first Qallunaat (outsider) to spend the winter. During the 1920s, the islands were surveyed by an engineer working for the Canadian Department of the Interior and, shortly afterwards, the Hudson Bay Company opened a trading post that was, with some interruptions, in business up until the 1950s. By the time the hamlet of Sanikiluaq was established there were then two settlements in existence - at the north and south ends of the islands. The Hudson Bay Company was in the north settlement and a school and some homes had been built in the south. To concentrate resources, the government of Canada decided to base the hamlet on the northern settlement – what is today Sanikiluaq. Until 1999, the hamlet was part of the Northwest Territories, but after years of land claim negotiations and a formal political accord in 1992, the territories were divided in order to create the new territory of Nunavut. Sanikiluaq is now part of the region of Qikiqtaaluk within this new territory.