Soldotna is on the Kenai Peninsula, 150 highway miles south of Anchorage, at the junction of the Sterling and Kenai Spur Highways. It lies 10 miles inland from Cook Inlet and borders the Kenai River. The area encompasses 7 sq. miles of land and 1 sq. mile of water. It is named after the nearby Soldotna Creek.

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The Peninsula has historically been the home to Kenaitze Indians, and was developed by non-Natives for its rich resources, including fish, timber and oil. Soldotna was named for a nearby stream; it is a Russian word meaning “soldier.” Others believe it is derived from an Indian word meaning “stream fork.” The first homesteaders were World War II veterans, given a 90-day preference over non-veterans in selecting and filing for property in 1947. That same year, the Sterling highway right-of-way was constructed from Cooper Landing to Kenai. Soldotna was the site for the bridge crossing the Kenai River. A post office opened in 1949, with stores and a community center shortly thereafter. Soldotna continued to develop because of its strategic location at the Sterling-Kenai Spur Highway junction. In 1957, oil was discovered in the Swanson River region, bringing new growth and development. Soldotna was incorporated as a city in 1960.

Sport fishing and tourism are currently the mainstays of the economy in Soldotna. It also receives some economic advantage from being the seat of the Kenai Peninsula Borough.