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The townsite of Kalgan is located in the south coastal region, about 21 kilometres northeast of Albany. It was gazetted a townsite in 1912 following the opening up of land in the area, but land had been put aside for a townsite here in 1837. The place was named "Wyndham" on an 1839 map of the area, but there was no subdivision or land made available in the townsite. It is recorded that it was to be the site of a farming community for the Society of Friends (Quakers), but there is no evidence that any Quakers ever settled in the area.

As there was already a Wyndham in the Kimberley when the town was gazetted in 1912, the name Kalgan was chosen for the townsite. Kalgan is the Aboriginal name of the river on which the townsite is situated, the name being first recorded by the explorer Dr A Collie as "Kalgan-up" in 1831. It is said to mean "place of many waters". The river had earlier been referred to as the "French River", since the French explored it in 1803.