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The area known today as Old Kildonan is located just north of the earliest European permanent, agrarian settlement in Western Canada, begun in 1812 with the arrival of the Selkirk Settlers, a small group of families brought over from the British Isles by Hudson's Bay Company major stock holder Lord Selkirk. After enduring the arduous trip from Hudson Bay, they were met by environmental setbacks - floods, grasshoppers, hail and drought - and by the hostility of many of the local inhabitants who rightly saw the settlement as an attempt to end a way of life that had developed over generations. Of course, the daily challenges of breaking the soil, planting crops, tending livestock and building homes combined to make life extremely trying. The family names of many of these settlers have become familiar to all Winnipeggers - Gunn, Bannerman, MacBeth, Polson, Matheson, McKay, McLeod, Sutherland, Ross, Flett and Inkster - and have been used to name streets throughout East and West Kildonan.

But the Settlement survived these early years and began to thrive. In 1876, the entire area was organized politically into the Municipality of Kildonan, named after the parish in Scotland where many of the original settlers had come from. The area would continue its slow growth, as some of the larger parcels of land were subdivided to give offspring enough land to make a living.

In 1914, the Municipality was split into east and west of the Red River, the east side becoming the East Kildonan, the west became West Kildonan. Both municipalities included more urbanized sections in the south, where subdivision and city-like residential development had taken place, and rural areas in the north. After 1900, the City of Winnipeg also began to expand in all directions and in the north, pushed its border along Main Street from Aberdeen Avenue to Inkster Boulevard (1900) and then to McAdam Avenue in 1906. In 1921, this basic difference between the north and south regions necessitated the creation of the Municipality of Old Kildonan (north) and the Municipality of West Kildonan (south), with Templeton Avenue the approximate boundary.

One of the most important sites in the municipality was Old Kildonan Church, located on John Black Avenue, just north of today's Chief Peguis Trail. Known as the Mother Church of Presbyterianism in Western Canada, Kildonan Presbyterian Church was opened, free of debt, on January 5, 1854 on the site known as Frog Plain.

Old Kildonan remained rural well beyond its amalgamation into the new City of Winnipeg in 1972 but more recently, residential development has occurred along both sides of Main Street.