In 1875, the Bureau of Indian Affairs sent an expedition into the Black Hills that explored the region south of the areas visited by the Custer Expedition of 1874. Reports of warm-water springs in the area of what is now Fall River County began to circulate in the Hills. As the gold rush slowed in the Northern Hills, many of the successful businessmen in Deadwood began to look for opportunities elsewhere in the hills and the idea of a warm-water resort appealed to many of them.

By 1881, an investment group dedicated themselves to the development and marketing of the community. As word got out, a steady stream of travelers came to the area to enjoy the mineral waters. At the time, medical tourism, visiting mineral spas, was a popular pastime and drinking and soaking in the water was said to cure just about every possible ailment.

Most of the beautiful sandstone buildings that exist today in Hot Springs were built between 1890 and 1910. The railroad brought travelers to the town by 1891. Hot Springs was the first tourist town in the hills. Today, Evans Plunge, built in 1890, remains one of Hot Springs’ major attractions. In the late 1800s, the State Soldiers’ Home and the Battle Mountain Sanitarium were built in Hot Springs, due primarily to the healing properties attributed to the mineral water. Today, the Soldiers’ Home is the State Veterans’ Home and the Battle Mountain Sanitarium is the Veterans’ Hospital. Spas, massage therapy, and natural foods are still a part of the Hot Springs economy today.

As miners prospected for gold and other minerals in the Black Hills, a second element for tourism arose: caves. Both Jewel Cave and Wind Cave were not mineral-rich enough to mine, but the caves themselves were interesting and cave tours became the second tourist attraction in the hills.

In 1916, Peter Norbeck was elected governor of South Dakota. Norbeck was a progressive and a conservationist and during his tenure was able to convince the legislature to create a state park board. As chairman of that board, Norbeck was able to work with the committee to ensure that Custer State Park would be one of the largest state parks in the nation. He also designed scenic highways through the park to make the land accessible to the public.

The crowning achievement of South Dakota tourism was the hiring of Gutzon Borglum to carve a mountain in the state. The idea was instigated by Doane Robinson, state historian, who believed that South Dakota could benefit from the increased use of automobiles if it could come up with a great attraction. Reading about the Stone Mountain carving of Confederate heroes in Georgia, Robinson contacted the carver on that project, Gutzon Borglum, to see if he might be interested in a project in the Black Hills.

Initially, Robinson envisioned several carvings in the spires of the Needles Formation, honoring both native and white heroes. Borglum determined that the spires were too fragile for that kind of work, and selected Mount Rushmore instead. He also decided that a more national theme was needed to attract people to the area, and picked the presidents who would grace the mountain. The carving started in 1927 and was completed in 1941. Today, over three million visitors a year visit the monument. In addition to the attraction itself, the carving brought new economic life to the defunct mining communities of Hill City and Keystone, which now service visitors with retail shops, dining establishments, and accommodations.

Today, tourism is a growing industry in the state of South Dakota. The 2010 initiative was created by the Department of Tourism and State Development in 2003 and established the goal of doubling visitor spending in the state from $600 million to $1.2 billion. By 2008, the increase in spending had reached $967 million.