Although the area was visited by Alexander Cochran, and others who were looking for a mill site, European settlers waited until the conclusion of the northern boundary dispute with Canada before settling the area in 1843.
Caribou was first incorporated as Lyndon on April 5, 1859 from Eaton Plantation and a portion of Half Township H. In 1869, Lyndon annexed Eaton, Sheridan, and Forestville Plantations; then on February 26 of that year, the name of the town was changed to Caribou, then back to Lyndon only a couple of weeks later. On February 8, 1877, the town's name was changed back to Caribou, as it remains. On February 23, 1967, it was incorporated as a city.
The town's population peaked in 1967, the year it became a city; then followed a population decline, attributed to a decline in the potato industry and the closure of nearby Loring Air Force Base in Limestone.
Caribou is located on the northern bend of the Aroostook River, as it heads southeast to join the Saint John River in Canada just east of Fort Fairfield.