On August 22nd 1884 the first shipment of Minnesota Iron Ore left the new port of Two Harbors. By the 1890's more than 4 million tons of ore was being shipped annually. This large volume of ship traffic warranted the Vessel Owners Association and the US Lighthouse Service to build a navigational aid on Agate Bay. The construction of the Two Harbors Light Station began in 1891 and the first lighting of the light was on April 14, 1892.
In 1985, the Lake County Historical Society obtained a lease from the Coast Guard to operate the lighthouse as a historic site. In 1998, the Society appealed to Congressman Oberstar and through a bill passed in Congress the ownership of the lighthouse was transferred to the Society. The Light Station is a privately owned aid to navigation. This means the Society is responsible for the care and maintenance of the light. Two Harbors Light Station is the oldest continuously running lighthouse on the North Shore.
Since 1999 the Lake County Historical Society has operated the Lighthouse Bed & Breakfast in the main keepers quarters which helps to generate the funding to maintain the facility.