Lars Levi Læstadius, the famous botanist, Lutheran minister, and founder of the revivalist movement Laestadianism, lived and worked in Pajala Municipality in the Mid-19th Century. He lived in Kengis, but in 1869 his house and grave and the whole church of Kengis were moved to Pajala.
The town was mistakenly bombed by Soviet airplanes during the Finnish/SovietWinter War, in spring 1940. Seven Soviet planes dropped 134 bombs, a mix of explosive and firebombs, which destroyed six buildings, badly damaging telephone wires, and making the streets impossible to drive on due to 43 big craters. No human deaths were recorded, although two persons were slightly injured. Soviet officers later inspected the destruction and the Soviet Union paid damages to Sweden in 1940.
The events in Mikael Niemi's book "Populärmusik från Vittula" (Popular Music from Vittula) occur mainly in Pajala. Vittula, or more properly Vittulajänkkä, is a colloquial name (vulgar in its Finnish-Sami etymology, at least) for a certain garden suburb in Pajala.
In another portrait of Pajala by Niemi, the crime novel "Mannen som dog som en lax" ("The Man who Died like a Salmon"), the author discusses the state of the minority language Meänkieli in Pajala today.