Temple Israel, originally called Shaarai Tov ("Gates of Goodness"), was founded in 1878 by German-speaking Jewish merchants. Their first house of worship, built in 1880, was located on Fifth Street between First Avenue (later Marquette Avenue) and Second Avenue South; it was a small, wooden synagogue in the popular Moorish Revival style. In 1888, the congregation moved to Tenth Street and Fifth Avenue South. When the synagogue burned down in 1902, the congregants erected a new synagogue in stone on the site of the lost building.
In 1901, Shaarai Tov hired Rabbi Samuel N. Deinard, an influential rabbi who helped grow the congregation. He acted as mediator between his Americanized congregants and the Eastern European Jewish immigrants who lived in North Minneapolis. Deinard also founded a local Jewish weekly newspaper, the American Jewish World, in 1912. In 1914, the congregation moved again, this time to the corner of West Twenty-Fourth Street and Emerson Avenue South. In 1920, Shaarai Tov became Reform and changed their name to Temple Israel. In September 1912, Deinard organized a visit from Bahá'í leader `Abdu'l-Bahá--visiting Minneapolis while on a speaking tour of the U.S.-who gave a public talk on Bahá'í teachings and the spiritualization of society at Temple Israel. In 1928, a new synagogue was built on the same site, this time by the firm of Jack Liebenberg and Seeman Kaplan; this neoclassical revival-style building remains a landmark overlooking Hennepin Avenue in Uptown Minneapolis.
Rabbi Deinard died suddenly and unexpectedly in 1921. His successor was Rabbi Albert Minda, who acted as head rabbi from 1922 to 1963. Rabbi Max Shapiro, Temple Israel's assistant rabbi since 1955, succeeded Minda and was named rabbi emeritus in 1985.
Marcia Zimmerman was hired as assistant rabbi in 1988, and in 2001, was named senior rabbi, making her the first woman senior rabbi of a congregation of more than two thousand families in the United States. In 2016, Temple Israel was undergoing construction to make way for a new education center and renovated synagogue.