In 1896 the Suomi Synod of the Finnish Lutheran Church, which had organized in 1890, established this institution to preserve Finnish religion, heritage, and culture, and to minister to the Finnish American congregations. Juho Kustaa Nikander and the other University of Helsinki–trained theologians who made up the consistory had knowledge of the earlier training of Swedish Americans for church work at Augustana College in Illinois and at Gustavus Adolphus College in Minnesota.

After reviewing prospective sites for the college in West Superior, Wisconsin; St. Paul, Minnesota; and Marquette and Houghton, the Suomi College committee selected Hancock because of the city's large Finnish population. In 1897 the school opened in temporary quarters and two years later, the first building, Old Main ( HO13.1), was completed. Finns in Finnish settlements throughout America, mining companies, and public officials contributed funds for the school.

Suomi expanded and diversified in the twentieth century. In 1904 a seminary was added and in 1924 the school became a junior college. The seminary was moved to Illinois in 1958, but Finlandia remained the only institution of higher education established by Finnish Americans in the United States when it closed due to financial and enrollment challenges in 2023.