Named for the hot water springs nearby, the town is the home of the state mental facility. Native Americans and early settlers referred to Warm Springs as “the deer lodge”, because of the large rust colored 40-foot-tall travertine mound that the springs flow from. Large number of deer were often seen grazing near the mound. The mound is now covered and protected and no bathing is allowed.

A small resort was built at Warm Springs in the 1860s. The property was later sold to two doctors who were partners in a contract to care for those residents of the Territory of Montana who were, back then, called insane. The asylum opened in 1873. In 1912 the state purchased the mental institution and has continued to expand and renovate the property. All of the original buildings have been demolished as age took its toll on them.