According to the United States Census Bureau, the city has a total area of 2.5 square miles (6.4 km²), of which, 2.4 square miles (6.3 km²) of it is land and 0.04 square miles (0.1 km²) of it (1.61%) is water.
There were 1,493 households out of which 24.0% had children under the age of 18 living with them, 49.2% were married couples living together, 7.6% had a female householder with no husband present, and 39.7% were non-families. 35.5% of all households were made up of individuals and 19.0% had someone living alone who was 65 years of age or older. The average household size was 2.19 and the average family size was 2.85.
In the city the population was spread out with 21.1% under the age of 18, 7.3% from 18 to 24, 26.5% from 25 to 44, 22.9% from 45 to 64, and 22.3% who were 65 years of age or older. The median age was 42 years. For every 100 females there were 88.9 males. For every 100 females age 18 and over, there were 86.4 males.
The median income for a household in the city was $35,029, and the median income for a family was $46,552. Males had a median income of $30,349 versus $22,650 for females. The per capita income for the city was $18,043. About 3.4% of families and 5.2% of the population were below the poverty line, including 7.1% of those under age 18 and 6.4% of those age 65 or over.
In the mid 1800s, immigrants from Germany, Bohemia, Scandinavian countries, and Belgium settled in this lakeside community. The earliest businesses consisted of a sawmill, general store, and churches.
In 1871, the city survived a fire that swept from Green Bay and destroyed thousands of acres of land. Local residents were prepared for the worst waiting with their boats and valuables at hand for a quick escape from the approaching flames. Luckily, torrential rains drowned out the fire right before it reached Ahnapee.
In 1879, the city was formally renamed Algoma which is name derived from an Indian word, meaning park of flowers. At that time the commercial fishing fleet located in Algoma was the largest on Lake Michigan and commercial fishing is still a major tourist attraction today.
The "Concerts in the Park Series" starts every Wednesday evening, rain or shine, at 7:00PM following the fourth of July and ending the Wednesday after Shanty Days. These concerts are sponsored in part by the city of Algoma and various local businesses. The performances are located at Heritage Park, next to the Algoma Marina.