In the early twentieth century, mining activity increased dramatically in the Iron River area of southern Iron County, when the notion that ore existed in the Iron River valley was proven false. Because the first ore in the area was discovered in outcrops in the valley, the assumption that the ore was confined to this area had persisted for years. Extensive excavation was required outside of the valley to remove enough of the deep glacial drift to reach the ore. This was reportedly first accomplished in 1905 by the homesteader, William James. Some accounts claim he was digging a well on his property north of Iron River, and accidentally struck ore 100 feet below the surface. Other accounts reveal he was intentionally excavating for iron. In the event, the discovery of ore two miles north of Iron booming economy of the entire Iron River settlement.

In 1906 the Mineral Hills Mining Company, which operated the Nanaimo and Beta mines in Iron river, acquired the rights to the James Mine, the first to produce marketable quantities of ore in the Mineral Hills area. Mineral Hills at that time consisted of a few isolated farms. Due to the lack of accommodation near the James Mine site, the Mineral Hills Mining Company constructed 12 simple frame houses west of the mine at what became the West James Location. As five additional mines opened in the area, including the Wauseca in 1910-1911, the Forbes in 1911-1912, it became a common practice. Each cluster of approximately a dozen houses was known as a "location." Housing in well in each location, and the structures were heated by wood-burning stoves.

In 1919, all of the locations in the area collectively became incorporated as the Village of Mineral Hills. A village hall was constructed in 1921. However, a business district never materialized and Mineral Hills had the last working mine in the country, the Sherwood, which closed in 1978. Most of the village inhabitants today work in nearby Iron River, and Mineral Hills is visually little altered since the closing mines.