Blue River is an unincorporated community in Lane County, Oregon, United States. It is located on Oregon Route 126 along the McKenzie River, between the communities of Finn Rock and Rainbow. It is in the Willamette National Forest, where the Blue River empties into the McKenzie. The community is named after the Blue River, which is named for the striking blue color that apparently comes from its rocky bed. Five miles northeast of the community, a dam on the Blue River forms the Blue River Reservoir.The area was first settled in the late 19th century by the Sparks family. Gold was discovered in the Blue River area in 1863, but by 1912, most gold mining activity had ended. The ore was low grade and the local stamp mills have not operated in many years. Records show, however, that the Lucky Boy Mine had extracted more than $1 million from the Blue River Mining District during the brief gold rush.