The Department of Highways (DHO), predecessor to the modern Ministry of Transportation (MTO), first assumed Highway 118 in 1955 between Highway 69 at Glen Orchard and Highway 35 in Dorset, via Bracebridge and Highway 11. In 1974, the section from Bracebridge to Dorset was renumbered as Highway 117 in preparation to extend Highway 118 along Muskoka District Road 4 (Peterson Road) towards Haliburton, which took place in 1981. In 1998, the segment west of Bracebridge was transferred, or "downloaded" to the District Municipality of Muskoka. However, in 2001, Highway 118 was extended east along the route of Highway 121 from Haliburton Village to Paudash.