Ketchum was named for a prominent member of the Delaware tribe and Methodist minister named James Ketchum who helped found the town in 1899. Ketchum was originally located in northeastern Mayes County, on the bank of the Grand River (Neosho River). It was relocated to southeastern Craig County around 1912 when the Kansas, Oklahoma, and Gulf Railroad (KO&G) was being constructed from southeastern Kansas to Texas. The original townsite sat in an area that was later filled in by the creation of Grand Lake o' the Cherokees.[8] The economy of Ketchum was based on agriculture until Pensacola Dam was built in 1937-1939, creating Grand Lake. Since then, the local economy has largely been dominated by tourism and other businesses related to the lake. Construction is currently underway to upgrade the town's airport which was formerly known as the Craig County South Grand Lake Airport. A group of private investors is funding the new airport which includes paving the former grass runway. When the new airport is completed it will be a full service regional airport and will be named the South Grand Lake Regional Airport.

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