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A Petoskey stone is a rock and a fossil, often pebble-shaped, that is composed of a fossilized rugose coral, Hexagonaria percarinata.he stones were formed as a result of glaciation, in which sheets of ice plucked stones from the bedrock, grinding off their rough edges and depositing them in the northwestern (and some in the northeastern) portion of Michigan 's lower peninsula.
The town was called Bear River when the first missionaries and fur traders arrived around 1855, later the name of the river that runs through the town and into Little Traverse Bay. The name Petoskey came about in the late 18th century after an Odawa Indian legend (See Petoskey Stone section).