Located just minutes west of Brainerd, located on what is now Highway 210. Baxter was incorporated on May 25, 1939.

The City of Baxter was named for Luther Loren Baxter, and early attorney for the Northern Pacific Railroad. The city was the site for the manufacturing of railroad ties for many years. Mr. Baxter was a state legislator, a judge, and a colonel during the Civil War. Tourism and various service industries have become Baxter's biggest employers, and numerous housing subdivisions have been developed in the wooded area west of Minnesota Highway 371, which passes through the town. Owing to the amount of unused land in the area, commercial development along the highway itself has also increased in recent years, though it has tended to conform to the pattern of urban sprawl.