Rainbow Valley is a watershed between Rainbow Peak to the west and Indianhouse Mountain to the east, drained by Rainbow Creek that starts from snowfields at an elevation of 5,000 feet (1,526 m) on the southern flank of Suicide Peak and flows southwest for 3 miles (4.8 km) to the northern shore of Turnagain Arm, about 17 miles (27 km) south-southeast of Anchorage and 17 miles (27 km) west-northwest of Girdwood, Alaska. The name was first used by local gold prospectors and was reported in 1898 by George F. Becker of the U.S. Geological Survey. The name for Suicide Peak was recently changed to the Dena’ina Athabascan name Yuyanq’ Ch’ex meaning Heaven’s Breath.
In 1895 the gold mining districts of Hope and Sunrise were founded on the southern shore and near the head of Turnagain Arm. The nearest deep water ports were in Passage Canal on Prince William Sound, Seward on Resurrection Bay and the Gulf of Alaska, and Seldovia in Kachemak Bay. Prospectors would either come over Portage Pass from Prince William Sound or the Resurrection Pass trail from the Kenai Peninsula to Hope and Sunrise. From Hope, they would use boats to cross Turnagain Arm to access several creeks on the northern shore such as at Rainbow where on a sunny day the mist produced gives the effect of a small rainbow. Other gold prospects on the north shore were at Indian Creek, Bird Creek, and Crow Creek.
From 1915 to 1918, railroad construction crews surveyed the Turnagain Arm section of the Alaska Railroad and then blasted more than 30 miles (48 km) of rock and built a series of long bridges along the section. As construction of the railroad progressed through the area, Rainbow became one of the supply camps and later a section house, and a spur line that can hold about 22 cars was built there. In 1919, Rainbow became a flag stop listed in the Railway Guide Index and the valley was settled by homesteaders. Today, the homesteads have been subdivided into an off-grid community of about 17 homes along an unpaved road that winds steeply uphill surrounded by Chugach State Park. A popular hiking trail of about 5 miles (8 km) ascends about 3,450 feet (1,050 m) to the summit of Rainbow Peak. Read more here and here. Explore more of Rainbow Valley and Turnagain Arm here: