Coon Creek township was named after a creek near Dead Coon Lake in Lincoln County, which gets its name from a dead raccoon found by surveyors at the lake. The township was organized on August 4, 1883.

Because of its slow settlement as a result of so much land being taken by schools, the railroad, and the University, Coon Creek was the last township to be organized in Lyon County. Though its population growth was slow at first, it is now one of the most densely populated farming townships in the county.

On January 4, 1882, a petition was given to the Board of County Commissioners asking for the creation of the township under the name Garfield in honor of the president. However, as another township in the state already had the name, the board gave the township the name of Stowe, but the township was never organized under this name. On July 17, 1883, the board gave the township its current name, and the first town meeting was held on August 4.

Wood Lake lies within the borders of Coon Creek township.