The present-day territory was created in June 1870, when the Hudson's Bay Company transferred Rupert's Land and North-Western Territory to the government of Canada. This immense region comprised all of modern Canada except British Columbia, the coast of the Great Lakes, the Saint Lawrence River valley and the southern third of Quebec, the Maritimes, Newfoundland, and the Labrador coast. It also excluded the Arctic Islands except the southern half of Baffin Island; these remained under direct British rule until 1880.

The name of the territory is traced to North-Western Territory, a region named for the geographical location relative to Rupert's Land.

After the transfer, the territories were gradually whittled away. The province of Manitoba was created on 15 July 1870, a tiny square around Winnipeg, and then enlarged in 1881 to a square region composing the modern province's south. By the time British Columbia joined confederation on 20 July 1871, it had already (1866) been granted the portion of North-Western Territory south of 60 degrees north and west of 120 degrees west. In 1882 Regina in the then-District of Assiniboia became the territorial capital; after Alberta and Saskatchewan became provinces in 1905, Regina became the provincial capital of the new province of Saskatchewan.


In 1876, the District of Keewatin, at the centre of the territory, was separated from it. In 1882 and again in 1896, the remaining portion was divided into the following districts (corresponding to the following modern-day areas):

Alberta (southern Alberta);

Assiniboia (southern Saskatchewan);

Athabaska (northern Alberta and Saskatchewan);

Franklin (the Arctic islands and Boothia and Melville Peninsulas);

Mackenzie (mainland NWT and western Nunavut);

Saskatchewan (central Saskatchewan);

Ungava (modern-day northern Quebec and inland Labrador, as well as an offshore area in Hudson Bay);

Yukon (modern Yukon Territory).