Originally established by miners seeking silver and gold in the surrounding mountains. Incorporated on October 2, 1876, named after Chief Ouray of the Utes, a Native American tribe.

Ouray bills itself as the "Switzerland of America" because of its setting at the narrow head of a valley, enclosed on three and a half sides by steep mountains. There are five developed hot springs in Ouray and nearby Ridgway. These include thermal pools and vapor caves. Ouray Hot Springs is the largest facility with numerous pools.