Dysprosium was first identified in 1886 by Paul Émile Lecoq de Boisbaudran, but it was not isolated in pure form until the development of ion-exchange techniques in the 1950s.

[11] Dysprosium combines with various non-metals at high temperatures to form binary compounds with varying composition and oxidation states +3 and sometimes +2, such as DyN, DyP, DyH2 and DyH3; DyS, DyS2, Dy2S3 and Dy5S7; DyB2, DyB4, DyB6 and DyB12, as well as Dy3C and Dy2C3.

The element was not isolated in relatively pure form until after the development of ion exchange techniques by Frank Spedding at Iowa State University in the early 1950s.

But this perspective has been criticised for failing to recognise that most wind turbines do not use permanent magnets and for underestimating the power of economic incentives for expanded production.

These compounds can be reduced using either calcium or lithium metals in the following reactions:[16] The components are placed in a tantalum crucible and fired in a helium atmosphere.

As the reaction progresses, the resulting halide compounds and molten dysprosium separate due to differences in density.

[32] The price increased to $1,400/kg in 2011 but fell to $240 in 2015, largely due to illegal production in China which circumvented government restrictions.

[34] As of November 2018[update] the Browns Range Project pilot plant, 160 km south east of Halls Creek, Western Australia, is producing 50 tonnes (49 long tons) per annum.

[35][36] According to the United States Department of Energy, the wide range of its current and projected uses, together with the lack of any immediately suitable replacement, makes dysprosium the single most critical element for emerging clean energy technologies; even their most conservative projections predicted a shortfall of dysprosium before 2015.

Because of dysprosium's high thermal-neutron absorption cross-section, dysprosium-oxide–nickel cermets are used in neutron-absorbing control rods in nuclear reactors.

[9] Because dysprosium and its compounds are highly susceptible to magnetization, they are employed in various data-storage applications, such as in hard disks.

[41] Neodymium–iron–boron magnets can have up to 6% of the neodymium substituted by dysprosium[42] to raise the coercivity for demanding applications, such as drive motors for electric vehicles and generators for wind turbines.

Based on Toyota's projected 2 million units per year, the use of dysprosium in applications such as this would quickly exhaust its available supply.

Terfenol-D has the highest room-temperature magnetostriction of any known material,[45] which is employed in transducers, wide-band mechanical resonators,[46] and high-precision liquid-fuel injectors.

Fibers of dysprosium oxide fluoride can be produced by heating an aqueous solution of DyBr3 and NaF to 450 °C at 450 bars for 17 hours.

This material is remarkably robust, surviving over 100 hours in various aqueous solutions at temperatures exceeding 400 °C without redissolving or aggregating.

[56] The stable isotopes of dysprosium have been laser cooled and confined in magneto-optical traps[57] for quantum physics experiments.

The first Bose and Fermi quantum degenerate gases of an open shell lanthanide were created with dysprosium.

[61] Due to its strong magnetic properties, Dysprosium alloys are used in the marine industry's sound navigation and ranging (SONAR) system.

[62][63] The inclusion of dysprosium alloys in the design of SONAR transducers and receivers can improve sensitivity and accuracy by providing more stable and efficient magnetic fields.

[67][68] Dysprosium nitrate, Dy(NO3)3, is a strong oxidizing agent and readily ignites on contact with organic substances.

Based on the toxicity of dysprosium chloride to mice, it is estimated that the ingestion of 500 grams or more could be fatal to a human (c.f.