Translated from the Khanty language, the word Labytnangi means "seven larches". Probably, in ancient times there was a sacred place here. At the beginning of the XIX century, the Labytnang camp appeared on the bank of the Vyl-Posl River. In the second half of the XIX century, the Khanty village of Labytnangsky yurts was located here. Local residents were engaged in fishing, hunting, reindeer husbandry, crafts and crafts.
In 1920, the Labytnangsky Village Council of the Obdorsky volost of the Berezovsky Uyezd of the Tyumen province was formed. In the late 1920s, a production partnership appeared here, and in 1932 a collective farm was transformed.
In 1948, a railway came to the Circumpolar Urals. Thanks to this, the settlement received the status of a working settlement, and on August 5, 1975, the settlement was transformed into a city of district significance.