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On February 26, 1907, the village reincorporated as the City of Two Harbors.

The town's history is included in the Lake County Historical Depot Museum.

By 1883 the Minnesota Iron Company had purchased all but four acres of Thomas Sextons land around Agate Bay.

Sexton leased his remaining four acres to merchants seeking to capitalize on the 600 man workforce arriving to build the Duluth & Iron Range Railroad. As with any frontier town of the day it was a largely male population.

The village of Agate Bay was created with the construction camp as work on the new railroad began in 1883.

The racial makeup of the city was 98.06% White, 0.06% African American, 0.66% Native American, 0.11% Asian, 0.08% from other races, and 1.02% from two or more races.

The infamous four acre plot earned the nickname Whiskey Row, and was said to exist for the sole purpose of "relieving a man from his pay".

Contrary to popular myth Whiskey Row was not destroyed by a fire in 1888.

The first residence constructed in Agate Bay was owned by Thomas Sexton (1854), he created a fourteen by sixteen foot shack.

The early settlers lived in primitive conditions, which was common for both the area and time. Diets often consisted of homegrown vegetables and animals that could be caught in the area (at that time there were many dense forests, so deer meat was not an abundant food source).