Kadykchan was built by gulag prisoners during World War II for the purposes of coal extraction. Later it accommodated miners at two local coal mines[1] which supplied Arkagalinskaya electric power station. The depth of mines was about 400 meters (1,300 ft).

After the dissolution of the Soviet Union, coal mining in the area became increasingly unprofitable. One mine closed in 1992, and an explosion at the other in 1996 which killed six people led to a decision to close it also and for the government to subsidize residents to move elsewhere.[1] Major buildings were blown up.[1] As of 2010, the settlement was officially completely depopulated.[2]