The town was organized from September 1880 to April 1881 by the Denver and Rio Grande Railroad (D&RG, later known as the Denver and Rio Grande Western railroad) as part of their efforts to reach Silverton, Colorado, and service the San Juan mining district, the goal of their "San Juan Extension" built from Alamosa, Colorado.

[8] Palmer, among other D&RG associates such as William Bell, started a subsidiary company known as the Durango Trust to sell land and plan a Main Street, 2nd, and 3rd Avenue, and so on to organize the town, taking inspiration from how Palmer founded the city of Colorado Springs.

Sales from the Durango Trust skyrocketed by the completion of the D&RG's Silverton Branch, and by 1885, Durango's business district had seven hotels and restaurants, eleven saloons, dance halls and stores, two bakeries and blacksmith shops, and a variety of other businesses, also boosting the town of Silverton's population to 2,000 at the time.

[8] The D&RG(W) and the Rio Grande Southern Railroad were vital resources to many places, including Durango, before the major introduction of the automobile, helping transport goods such as produce and mineral traffic in and out of the Southwestern Colorado area, and along with other businesses such as the Durango Smelter, immensely supporting the town's economy.

However, the Great Depression and aftermath of World War II hurt the area's railroad industry.

In turn, the D&RGW introduced the major tourism industry into the Durango area, transporting visitors up to Silverton and back and attracting Hollywood into La Plata County for a time.

Once the D&RGW ended up losing its freight traffic in 1968, the tracks from Durango east to Chama, New Mexico, and south to Farmington, New Mexico, were removed, but the Silverton Branch remained in operation until 1981 when it was sold and became the Durango & Silverton Narrow Gauge Railroad.

Main Avenue is a Nationally Registered Historic District that cuts through downtown Durango and is home to galleries, boutiques, restaurants, bars, and other businesses.

Two notable and historic hotels, the General Palmer and the Strater, lie at the south end of the avenue, near the Durango & Silverton Narrow Gauge Railroad depot.

North of Durango, 550 is nicknamed the Million Dollar Highway, and is part of the scenic San Juan Skyway.

Durango Transit provides several loop bus routes in the community, including Fort Lewis College.

[15] Durango has two sister cities, as designated by Sister Cities International: The Denver & Rio Grande Western Railroad began to advertise the La Plata County Area to Hollywood beginning in the mid-1930s, kick-starting Durango's future in film appearances.