The original Red Mill was located in the Capitol Hill neighborhood in Seattle and opened in 1937. It closed in 1967. It was known as a diner and ice creamery with table and counter service. The current Red Mills were opened first in the Phinney Ridge neighborhood in 1994 and the second location in the Interbay neighborhood in 1998.

In its first year of operation the Red Mill received honorable mention in the best burger category in the Seattle Weekly's annual Best of Seattle issue. It has subsequently won the best burger award every year since, along with numerous other accolades.

Owners John and Babe Shepherd named the Red Mill in honor of their two late sisters, Kathleen and Monica Shepherd, both of whom worked at the original red mill as waitresses and would bring home french fries and other goodies for their younger siblings including Michael and Mark Shepherd.

Numerous Shepherds are or have been involved in running the current stores. The Red Mill mural painted by noted local artist Tom Brady on the Phinney Ridge location features two faceless girls picking flowers under the Mill. These girls represent Kathleen and Monica Shepherd.