The saloon was built in 1897 with wood cut by Captain Willian Moore who was the founder of Skagway. It opened for business in 1898. The first floor was a bar whilst on the upper floor was a brothel. There were ten rooms which all had a hole in the floor which was connected to the cash register in the bar by means of a copper pipe, also at the bar the bartender would keep ten dolls, one for each of 'the girls' if they were busy the doll was laid down, when she was ready for a customer the doll would be sat up. By 1899 business was beginning to slow as most of the girls went to Dawson which was closer to the gold fields. The railroad became the centre of business for Skagway and many buildings were being moved to be nearer the depot. The Red Onion was moved in 1914. The building was used as a army barracks during World War II, after that it had a few different uses including a laundry and a gift shop. In 1980 the building was brought and the owner purchased a liquor licence and it became a saloon once more. And on the upper floor is a brothel museum.

The apparition of a female figure is often seen at the saloon, also footsteps are heard and people often smell strong perfume.