Old Kanarra, as it was called by early inhabitants, was founded in the spring of 1861 by settlers who moved from Fort Harmony. The town was situated on Kanarra Creek about one mile north and east of the present location. Later, a group from Toquerville built on the present site in the spring town fashion shown. This settlement became known as Fort Kanarra.
In 1866 the present townsite of Kanarraville was surveyed by settlers from Kanab. During the same year this aggregate of settlements became one when the original group also moved to the new townsite, bringing with them a log meeting house. This building served for several years as a church, school and social hall. To build their homes, logs were hauled out of Shirts' Canyon to the east.
The first child born in Kanarraville, James Wallace Pollock, son of Samuel Pollock, arrived on November 17, 1866 in his father's blacksmith shop.
On September 29, 1867 Apostle Erastus Snow set apart Lorenzo W. Roundy as the first Bishop of this Mormon community.
The town may have acquired its name from either of two sources. The popular belief is that the name came from an Indian Chief, Kuanar, who resided along the creek. Another origin may have been from the kind of willows that grew along the creek, Kanarra Willows