The town came into existence as the result of a gold rush that began in 1904, and had its peak population from 1905 to 1910, when decreased gold production led to a decline that culminated in its abandonment by 1919.
Gold was discovered in the area by Shorty Harris and E.L. Cross on August 4 1904. Their "Bullfrog strike" gave rise to a number of gold rush towns that drew prospectors and speculators from surrounding towns such as Goldfield and Tonopah. Rhyolite, named for the deposits of the rock which contained much of the gold, would become the largest of these settlements. The most important operation was the Montgomery Shoshone mine and a mill was constructed to process its ore. The mine was sold to industrialist Charles M. Schwab in 1906 for a reported 5 million dollars. By 1907, the town had electricity with an estimated population of 3,500 to 10,000. The Panic of 1907 is believed to have adversely affected the town's economy. Production began to slow down by 1908 and the mine and mill were closed in 1911. By 1910 only an estimated 675 people remained in Rhyolite. The lights and power were turned off in 1916. By 1919, the post office had closed and the town was abandoned.
Walter E. Scott, "Death Valley Scotty" often visited Rhyolite.
The old train station still remains with a caboose sitting nearby. The building is in remarkably good shape. There is an abandoned mine entrance with a posted warning "Unsafe Mine! Stay out, stay alive!" Many of the old buildings, such as the Bottle House and train station, are fenced off from the public to protect them from vandalism. Most of the other buildings, including the bank, schools, and jail, have long since decayed and partially caved in.
The Bottle House, a house built from thousands of beer and liquor bottles by Tom Kelly in 1906, was restored by Paramount Pictures in 1925 for use in a movie. Recently rebuilt, it remains standing and complete.
Goldwell Open Air Museum, a free admission outdoor sculpture park, is located at the southern entrance to Rhyolite, off Highway 374.