In 1889, the United States Lighthouse Board realized that Mackinaw Point was a better location. Their first inclination was to put a fog signal there, but when asking Congress for funding, they requested funding for both a fog signal and a first class lighthouse. Congress chose to accept their recommendation, but only voted the funding for a steam-powered fog-signal. The fog signal was built in 1890. The signal proved to be exceptionally necessary for navigation in the often fog-choked Straits of Mackinac; during one exceptionally humid fortnight, the Old Mackinac Point signal personnel reported burning 52 cords of stove wood in order to keep steam up for the foghorn. The lighthouse "grew out of the fog station."
In March 1891, Congress finally authorized the funding for a light station and the board acted quickly. Bidding was difficult, but in 1892, "on a foundation of ashlar limestone, the tower and attached keeper’s dwelling were both constructed of Cream City brick, trimmed with Indiana Limestone. The double-walled cylindrical tower was laid with an outside diameter of 13 feet 4 inches (4.06 m), and as each course was added, rose to a height of 45 feet (14 m), surmounted by a circular iron gallery and an 8-foot-8-inch (2.64 m) diameter watch room, which was in turn capped by a prefabricated octagonal iron lantern." The lens is a fourth order Fresnel Lens.
Its light was visible for 14 nautical miles; 26 kilometres (16 mi), which made it "particularly valuable" to the railroad car ferries SS Chief Wawatam and SS Sainte Marie operated between Mackinaw City and St. Ignace.[