The historic village of Kagawong is one of Manitoulin's most picturesque - in fact it is justified in claiming itself to be "Ontario's Prettiest Village". Part of Kagawong's appeal lies in its geography. The village is built into a valley with its downtown situated on the waters of Mudge Bay. The North Channel lies in the distance. The trail and flower-lined Kagawong River flows into the bay from beautiful Bridal Veil Falls.

The village takes its name, Kagawong, meaning in Ojibwe "where the mists rise from the falling waters". All this natural beauty may be thought reason enough for the town's existence, but it was as a fishing and timber centre that it was first established. The falling and flowing waters of the Kagawong River, now appreciated for aesthetics, were once harnessed to drive the machinery of the Kagawong Mill. The mill, built in 1925, produced paper before being converted in 1932 to generate hydro-electricity until its closure in 1949.