Portage Lake was settled in 1844, and organized on September 2, 1850 as a plantation from T15 R3 WELS. After several confirmations as a plantation, it was incorporated as a town on March 24, 1909. The name, portage, refers to the carrying of a canoe from one body of water to another.
Portage Lake itself dominates the town, while its main village, Portage, is at the southeastern end of the lake, about twelve miles northwest of Ashland on Maine Route 11.