Tuktoyaktuk is the anglicized form of the native Inuvialuit place-name, meaning "resembling a caribou." According to legend, a woman looked on as some caribou, common at the site, waded into the water and turned into stone, or became petrified. Today, reefs resembling these petrified caribou are said to be visible at low tide along the shore of the town.
No formal archaeological sites exist today, but the settlement has been used by the native Inuvialuit for centuries as a place to harvest caribou and beluga whales. In addition, Tuktoyaktuk's natural harbour was historically used as a means to transport supplies to other Inuvialuit settlements.
Between 1890 and 1910, a sizeable number of Tuktoyaktuk's native families were wiped out in flu epidemics brought in by American whalers. In subsequent years, the Alaskan Dene people, as well as residents of Herschel Island, settled here. By 1937, a Hudson's Bay Company trading post was established.
Radar domes were installed beginning in the 1950s as part of the Distant Early Warning Line, to monitor air traffic and detect possible Soviet intrusions during the Cold War. The settlement's location (and harbour) made "Tuk" important in resupplying the civilian contractors and Air Force personnel along the "DEW Line." In 1947, Tuktoyaktuk became the site of one of the first government "day schools" designed to integrate Inuit youth into mainstream Canadian culture.
The community of Tuktoyaktuk eventually became a base for the oil and natural gas exploration of the Beaufort Sea. Large industrial buildings remain from the busy period following the 1973 OPEC oil embargo and 1979 summertime fuel shortage. This brought many more outsiders into the region.
On 3 September 1995, the Molson Brewing Company arranged for several popular rock bands to give a concert in Tuktoyaktuk as a publicity stunt promoting their new ice-brewed beer. During the months leading up to concert, radio stations across North America ran contests in which they gave away free tickets. Dubbed The Molson Ice Polar Beach Party, it featured Hole, Metallica, Moist, Cake and Veruca Salt. Canadian film-maker Albert Nerenberg made a documentary about this concert entitled Invasion of the Beer People.
In late 2010, the Canadian Environmental Assessment Agency announced that an environmental study would be undertaken on a proposed all-weather road between Inuvik and Tuktoyaktuk. Work on the Inuvik-Tuktoyaktuk Highway officially started on January 8, 2014, and the highway was officially opened on 15 November 2017.
Tuktoyaktuk is set on Kugmallit Bay, near the Mackenzie River Delta, and is located on the Arctic tree line.
Many locals still hunt, fish, and trap. Locals rely on caribou in the autumn, ducks and geese in both spring and autumn, and fishing year-round. Other activities include collecting driftwood, reindeer herding, and berrypicking. Most wages today, however, come from tourism and transportation. Northern Transportation Company Limited (NTCL) is a major employer in this region. In addition, the oil and gas industry continues to employ explorers and other workers.
Tuktoyaktuk is the gateway for exploring Pingo National Landmark, an area protecting eight nearby pingos in a region which contains approximately 1,350 of these Arctic ice-dome hills. The landmark comprises an area roughly 16 km2 (6.2 sq mi), just a few miles west of the community, and includes Canada's highest (the world's second-highest) pingo, at 49 m (161 ft).
At the 2016 census, the Hamlet of Tuktoyaktuk had a population of 898, up 5.2% from the 2011 census total of 854. There are 283 private dwellings, and a population density of 64.1 inhabitants per square kilometre (166/sq mi). The average annual personal income in 2016 was $21,984 Canadian and the average family income was $55,424. Tuktoyaktuk has a large Protestant following, with a sizeable Catholic population as well. Local languages are Inuvialuktun and English. Tuktoyaktuk is predominately Inuit/Inuvialuit (79.7%) with 16.4% non-Aboriginal, 2.8% North American Indian and 1.1% Métis. In 2012 the Government of the Northwest Territories reported that the population was 954 with an average yearly growth rate of -0.8 from 2001.
Tuktoyaktuk displays a cold subarctic climate, just short of a polar (tundra) climate, as the July mean temperature is barely above 10 degrees Celsius (50 degrees Fahrenheit).
Tuktoyaktuk/James Gruben Airport links Tuktoyaktuk to Inuvik. This 30-minute flight costs a few hundred dollars per passenger. Formerly in winter time, the Tuktoyaktuk Winter Road provided road access to Inuvik. The $300-million Inuvik-Tuktoyaktuk Highway opened in November 2017, which provides all-season access to Inuvik, which connects to the rest of the highway networks in Canada.