Founded in the earliest phase of the conquest of Honduras, Gracias a Dios was relocated twice before being established at its current location on January 14, 1539, by Bishop Cristóbal de Pedraza and Juan de Montejo under orders of Francisco de Montejo, then ruler of Honduras. In those early years, the would-be colonists were engaged in a fierce struggle against the Lenca leader Lempira, and the settlement was apparently moved for strategic reasons. The second location reportedly served as the main Spanish base for quelling the revolt, after which the town was moved farther south to its present location.

According to legend, the town received its name because one of the conquistadors had a heck of a time finding any land flat enough for a town in the mountainous region. When a suitable spot was located, the Spaniards reportedly gave the heartfelt cry, “Thank God we’ve finally found flat land!” Hence, Gracias a Dios (later shortened to “Gracias”).

With the establishment of the Audiencia de los Confines in Gracias on May 16, 1544, the town became the administrative center of Central America. The audiencia was a royal court of sorts with power to impart civil and criminal justice and a jurisdiction ranging from the Yucatán to Panama. Some of the larger towns in Guatemala and El Salvador quickly became jealous of the prestige accorded Gracias and forced the audiencia to move to Antigua, Guatemala, in late 1548.

Following the removal of the audiencia, Gracias fell into a long, slow slide. When the little gold and silver in the area were quickly worked within a couple of decades after the conquest, local colonists had little to fall back on beyond cattle-ranching and tobacco production. Gracias remained an important administrative center for Honduras throughout the colonial period, but by the early 19th century, nearby Santa Rosa de Copán had taken over the tobacco industry and, not long after, also became the de facto regional capital.

Over the past decade Gracias has worked hard (and successfully) to put itself back on the map through the development of a tourist industry. Capitalizing on the rich human and natural resources in the region, the town has established itself as a premier base for travelers looking for that elusive travel experience—approachable authenticity.