Pahrump was originally inhabited by the Shoshone. It was slowly inhabited by American settlers in the late 19th century. They reportedly chose the name for Pahrump after the original indigenous name Pah-Rimpi, or "Water Rock," so named because of the abundant artesian wells in the valley. Because of the artesian wells, the new inhabitants of Pahrump Valley began a number of large ranch-style holdings, mostly over 1000 acres (4 km²) in size. On these ranches, alfalfa and cotton were grown, and livestock were raised.
Until the 1960s, Pahrump had no telephone service except a radio transmitter phone in a phone booth next to the small market, and there were no paved roads in or out of the Pahrump Valley. However, as Las Vegas grew, real estate speculation became more popular in the area, which led to increased interest in Pahrump. This led to the introduction of telephone service and the construction of a paved highway, from Las Vegas to Pahrump, during the late 1960s. Later, this road (NV 160) was extended from Pahrump northward to US 95, near Amargosa Valley. A second paved road (NV 372) was introduced that went from Pahrump to neighboring Shoshone, California, which provided a link to the Death Valley area, as well as a shorter route to those wishing to travel to Los Angeles or other areas in California. In the fifties and sixties, there was a two room elementary school and the high school students went to Shoshone. In 1974, Pahrump's first high school was constructed.
Since the late 1970s, Pahrump has grown almost exponentially, increasing from about 2,000 residents in 1980 to 36,000 in 2010. Pahrump is an archetypal example of an exurb. Almost all significant agriculture has ceased in the valley and the surface aquifers have been filled up over the years. Pahrump has also attracted a number of notable residents, including paranormal talk radio host Art Bell, and Michael Jackson, who purchased a home in the area in 2008, where he briefly had a home studio and home schooled his three children.
Notable businesses in the area include Front Sight Firearms Training Institute and Spring Mountain Motor Sports Ranch, in addition to several legal brothels such as the Chicken Ranch and Sheri's Ranch, and wineries including Sander's Family Winery and Pahrump Valley Winery.
Like many communities in Nevada, Pahrump has an unincorporated town status, with a limited government that manages land use planning, recreation, and fire, while leaving most services to Nye County. In May 2009, the town board set up an advisory board to study incorporating Pahrump as a town or city.
On November 15, 2006, the Pahrump town board voted for an ordinance declaring English the official language of business, forbidding the display of foreign flags and denying any benefits to illegal aliens. A measure in the ordinance requires an American flag to be displayed above any other flag, regardless of what organization, nation or government it represents. This law was repealed on February 13, 2007. In 2012 the citizens of Pahrump voted to disband the Town Board form of government in favor of becoming an advisory board under the County Commissioners. It will be finalized in 2014 when the incumbent elected members' terms expire.