The new city enveloped the existing colonial New Mexican settlement of Los Alamitos and grew along the tracks of the Atlantic and Pacific Railroad.

The town prospered from railroad logging in the nearby Zuni Mountains, and it was a section point for the Atlantic and Pacific, which became part of the Atchison, Topeka and Santa Fe Railway.

The Zuni Mountain Railroad short line had a roundhouse in town (near Exit 81 off Interstate 40) and housed workers in a small community named Breecetown.

Agriculture was aided by the creation of Bluewater Reservoir, and the region's volcanic soils provided ideal conditions for farming.

Grants also benefited from its location as airway beacon and later by U.S. Route 66, which brought travelers and tourists, and the businesses that catered to them.

As of 2013[update] the beacon and FSS building on the airport (KGNT) was being restored as the Western New Mexico Aviation Heritage Museum.

To the northeast of town are the San Mateo Mountains and Mount Taylor, at 11,301 feet (3,445 m) the highest peak in the region.

West of the city is the Continental Divide and the Zuni Mountains, an eroded anticline with 2-billion-year-old Precambrian granites and metamorphic rocks at its core.

Located in one of the driest areas in the United States, Grants receives about 11 inches or 280 millimetres of precipitation annually.

From October, when the monsoon retreats, afternoon temperatures fall from very warm to hot down to comfortable by November and to cool during the winter proper.

During the spring, the weather steadily heats up, with maxima topping 70 °F (21.1 °C) before the end of April and reaching 90 °F or 32.2 °C on 35.6 afternoons – although only five mornings on record have stayed above 68 °F or 20.0 °C.

[13] There is a branch of New Mexico State University offering a two-year postsecondary program as well as advanced degrees through distance education.

The National Park Service and the Bureau of Land Management operate the El Malpais Visitor Center at Exit 85 off Interstate 40 in Grants.