The area around Gabrovo, inhabited since the Neolithic, gained economic importance after Veliko Tarnovo became capital of the Second Bulgarian Empire in the 12th century.

After the Ottoman invasion of the Balkans in the 14th century, the demographic position of Gabrovo changed significantly, as it was the only settlement in a considerably large geographic area and an attractive place for Bulgarians fleeing from the conquered capital and neighbouring fortresses.

Joint-stock companies emerged, factories were constructed and connections to the large stock exchanges were created, prompting some to label the town "The Bulgarian Manchester".

On a Saturday around the week of May 21, Gabrovo hosts an annual Carnival of Humor and Satire with the slogan in Bulgarian “Da izkukurigame ot smyah” (translating to "Let`s go nuts from laughter").

On the day of the carnival, the streets of Gabrovo town are overflowing with fun characters like masked musketeers, bullfighters, shamans, gypsies, and much more.

The carnival is also popular for its use of traditional Balkan songs, folklore choreography, and a rich display of Gabrovo humour and culture.

Places of interest in Gabrovo include the House of Humour and Satire and Aprilov National High School.

A minor planet 2206 Gabrova discovered on April 1, 1976, by Soviet astronomer Nikolai Stepanovich Chernykh is named in honor of the town.