The Monroe township, which sits in the southeast corner of Lyon County, was originally settled in 1871 before being organized on January 5, 1874. Monroe was named by Louis and Ole Rialson who came from Monroe Wisconsin.

The township shares its name with counties from seventeen other states, and even more with towns and villages of the same name. Many of these were named in honor of president James Monroe.

The town of Tracy acted as both a village and a junction of the Chicago and Northwestern railroad. Tracy was platted in 1875, and incorporated in 1900. It was named in honor of John F. Tracy, a former president of the railway.

Lake Sigel and the shallow Twin Lakes lie within the Monroe township. Lake Sigel was named in honor of General Franz Sigel, who was a distinguished participant in the Civil War.