Underwood is a city in Otter Tail County, Minnesota, United States. The population was 356 at the 2020 census. Underwood was platted in 1…Underwood is a city in Otter Tail County, Minnesota, United States. The population was 356 at the 2020 census. Underwood was platted in 1881, and named for Adoniram Judson Underwood, a politician and editor of the Weekly Journal, a Fergus Falls-based newspaper. A post office has been in operation at Underwood since 1884. Underwood was incorporated in 1912.