Before Ouray was founded the Tabeguache Indians lived in the area during the warm summer months. They loved the water of the region and called it "sacred miracle water". But when the Europeans came in during the early 1870s competition for the land was made clear. A treaty was proposed to the Chief Ute Ouray to give over the land of the San Juan Mountains over to them; he signed it and it was a done deal. A peacemaker, the chief gave away the land in sadness, but kept peaceful relations with the settlers and as a result the name of the town became Ouray.

Soon the gold rush and mineral rush in general was flooding the West with energy and people were flocking to any area with promise for precious metals. Camp Bird, possibly the best mine in all of Colorado was located just north of Ouray and the addition of a tollway that connected the city with Denver made city growth fast between 1880 and 1890. Ouray suddenly became a true town and buildings popped up in no time including a hospital, hotels, a library, and more all in a Victorian architectural style.  

The hotels that went up at the same time as other community building brings up the fact that Ouray was also immediately recognized as a tourist town because of its stunning beauty and convenient location. Today Ouray is called the Switzerland in America because of its location surrounded by mountains.