In 1966, Governor Walter J. Hickel opened the North Slope to oil extraction. To improve access to the oil fields, a 400-mile winter road was planned between Livengood and Prudhoe Bay. Construction started in November 1968, and the "Walter J. Hickel Highway" was completed by March 1969. Due to poor engineering, the construction of the road exposed the underlying permafrost to thawing, and the road was abandoned by April of that year.[1] Maintenance was not performed as the route was farther west than the planned Trans-Alaska Pipeline System.[2]

Following the failure of the Hickel Highway, oil companies still needed a route to the North Slope. The Alyeska Pipeline Service Company funded what would be the first stretch of the Dalton Highway from Livengood to the Yukon River in 1969.[2]

Delays to the construction of the Trans-Alaska Pipeline System, and therefore the road, meant that work on it did not resume until April 29, 1974.[3] Within 5 months, 390 miles of the road were built and construction was finished. The pipeline would not be completed until 1977.[2] It was initially known as the "Wales Highway".[4]

In 1979, Alyeska turned over control of the road to the state of Alaska, who gave it the official name of "James W. Dalton Highway", named after the prospector of the North Slope, James W. Dalton. In 1981, the highway was opened to the public up to Disaster Creek at mile 211. In 1994, the public was allowed access to the entire length of the highway.[2]