Situated in the Ore Mountains at 1,028 m (3,373 ft) above sea level, it is considered the highest town in the Czech Republic.

[3] Boží Dar is located about 20 kilometres (12 mi) north of Karlovy Vary, on the border with Germany.

The area around Božídarský Špičák with peat bogs is protected as the Božídarské rašeliniště National Nature Reserve.

The remote area in the Saxon Barony of Schwarzenberg was settled after silver and tin mining began about 1517.

Boží Dar was founded as a mining town by decree of John Frederick I, Elector of Saxony, who acquired the lordship in 1533.

Together with neighbouring Horní Blatná, John Frederick had to cede the town to the Habsburg lands of the Bohemian Crown in 1547 after the Schmalkaldic War and his defeat in the Battle of Mühlberg.

In 1580, Emperor Rudolf II promoted Boží Dar to the royal mining town.