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The townsite of Salmon Gums is located in the Esperance agricultural region, 817 kilometres from Perth and 106 kilometres north of Esperance. It is on the main road and railway routes between Esperance and the goldfields. A railway between Esperance and Norseman was proposed in 1910, and in 1912 land for a future townsite was set aside here, as it was considered a likely watering place for the railway. In 1916 the District Surveyor recommended the townsite be named Salmon Gums, and the name was also selected for the proposed railway station. The railway however, was not built until the mid 1920's, the Esperance to Salmon Gums section opening in 1925, and the townsite of Salmon Gums was also gazetted the same year.
This townsite derives its name from a prominent belt of Salmon Gums which was a landmark for travellers to the goldfields in the 1890s. In 1910 a surveyor reported "extending NNE for about five miles by about one mile and a belt known as "Salmon Gums". The tree is Eucalyptus Salmonophloia, a beautiful erect and branching tree of the semi arid regions growing to a height of 25 metres with a spread of five metres. It is so named because of its smooth salmon coloured bark.