Long the major town in central Oregon, Prineville was snubbed in 1911 when the railroad tycoons James J. Hill and Edward H. Hillman bypassed the city as they laid track south from The Dalles. In a period when the presence of a railroad meant the difference between prosperity and the eventual fate as a ghost town, in a 1917 election, Prineville residents voted 355 to 1 to build their own railway, and raised the money to connect their town to the main line 19 miles away.
Helped by timber harvests from the nearby Ochoco National Forest, the City of Prineville Railroad prospered for decades. The profits from the railroad were so abundant that between 1964 and 1968, the city levied no property taxes. However, with the decline of the timber industry in Oregon, the revenue from the railroad have vanished: in 2003, the railroad reported a loss of $400,000.
Les Schwab, a chain of tire stores based in Prineville, has been associated with the town since the company's founding in 1952. As of 2005, the Les Schwab Tire Center chain operates more than 390 stores in California, Idaho, Montana, Nevada, Oregon, Utah, and Washington, does more than $1.5 billion in sales each year, and, according to the AP, is the number two private tire retailer in the United States. The company announced December 12, 2006, that it would be moving the corporate headquarters to nearby Bend, where a growing number of its executives live, including Dick Borgman who became CEO on the same day. Journalist Mike Rogoway noted:
A decade ago, Schwab could have devastated Prineville by pulling out. Now, though, the city that suffered through the downturn in the wood products industry is enjoying an economic renaissance. Federal jobs with the Bureau of Land Management and Forest Service help anchor the economy [Judge Scott Cooper, Crook County administrator, was quoted], while a housing boom and a growing tourism industry have diversified the area.
Prineville got its first Starbucks in 2006, and a plan was floated to reopen the city's long-shuttered movie theater. Unemployment is 4.4 percent, the lowest since the 1960s.
Prineville is also the former home of the famous J. Oscar Olsen, renowned poet and entrepreneur.
According to the United States Census Bureau, the city has a total area of 6.7 square miles (17.2 km²), all of it land.
Prineville is located on the Crooked River at the mouth of Ochoco Creek, 14 miles northwest of the Prineville Reservoir.
During the Miocene and Oligocene, great basaltic flows swept through the area.
There were 2,817 households out of which 35.8% had children under the age of 18 living with them, 51.4% were married couples living together, 11.7% had a female householder with no husband present, and 32.3% were non-families. 27.1% of all households were made up of individuals and 13.2% had someone living alone who was 65 years of age or older. The average household size was 2.55 and the average family size was 3.09.
In the city the population was spread out with 29.3% under the age of 18, 9.6% from 18 to 24, 27.0% from 25 to 44, 18.6% from 45 to 64, and 15.5% who were 65 years of age or older. The median age was 33 years. For every 100 females there were 93.1 males. For every 100 females age 18 and over, there were 88.0 males.
The median income for a household in the city was $30,435, and the median income for a family was $36,587. Males had a median income of $31,224 versus $22,852 for females. The per capita income for the city was $14,163. About 10.0% of families and 14.3% of the population were below the poverty line, including 16.6% of those under age 18 and 13.1% of those age 65 or over.