In 1863 Mormon pioneers arrived at the site of Montpelier to found a settlement at the request of Church leader Brigham Young. The location benefited from the Oregon Trail, which passed through the town. The town was named Clover Creek, then Belmont, and finally Montpelier, the name given to it by Brigham Young.
Montpelier is at the junction of U.S. Highway 30, which follows the route of the Oregon Trail, and U.S. Highway 89. Highway 89 crosses Bear Lake Valley to the south and goes up Montpelier Canyon immediately east of town. Highway 30 follows the Bear River roughly, from the southeast to the northwest. It leads to Soda Springs about half an hour to the northwest.
Montpelier was an early terminal on the railroad which brought growth and business to the town as well as a division in the population ("Mormon" and "Gentile"). For a time, there was a fence which divided the town, complete with a gate on Washington Street which was closed at night. In 1972 the terminal was moved to Pocatello, but Montpelier has continued to be the largest town in Bear Lake County, with a population of 2,785 (as of the year 2000).
Montpelier sits on the northeast side of Bear Lake Valley, a long, broad grassland valley graced by Bear Lake, a popular recreation area, at the south end. The Bear River passes around Montpelier some distance to the south and the west. The Wyoming border is just over the hills to the east. The elevation at Montpelier is just under 6000 feet, inviting cold winters and mild summers.