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Carlyle was incorporated as a village in 1902, and as a town in 1905. The CPR was constructed and in operation in 1900. The CNR laid steel into the townsite on October 28, 1909, and on July 7, 1910, the first passenger went through town. Early settlers to the district were mainly of British descent. The name Carlyle was chosen by the first postmaster to honour the niece of the Scottish historian and essayist, Thomas Carlyle: his niece and her husband settled in the Arcola district, and farmed and raised a family there. Trains were running through the town site in 1901 and the population increased from 23 that year to nearly 400 in 1906. In 1941, Carlyle still had around this number, but by 1956 the population had surged to 829. Subsequently, and unusually for a smaller community in Saskatchewan, Carlyle's population has slowly but steadily continued to climb. The town is 24 km south of Moose Mountain Provincial Park.

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