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Originally part of the Indiana Territory, the area which is now Luce County became part of the Michilimackinac Region in 1818. In 1828 the Upper Peninsula was divided into two counties, Michilimackinac, which included parts of the lower peninsula, and Chippewa, which included most of the area which is now Luce County. By 1852 the Upper Peninsula was divided into five counties: Chippewa, Mackinac, Marquette, Houghton, and Ontonagon. When Luce County was formed out of Chippewa County and a small portion of Mackinac County in 1887, Newberry became the county seat, it being the major population center of the area. Luce County was named for Governor Cyrus Luce and Newberry was named for John S Newberry, a former congressman and Detroit entrepreneur, who was involved in the development of the area.

Still sparsely populated, 40% of the county is in the Tahquamenon River and Lake Superior state forests and a large percentage of the county is classified as swampland. The first industrial development was the Vulcan Furnace Company, an iron smelting works in Newberry, followed by logging and then farming. After the Newberry Lumber and Chemical Company (earlier called the Lake Superior Iron and Chemical Plant) closed down in 1945, the major role in the county economy was filled with the Newberry Regional Mental Health Center, which has since been closed down.

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