During the Edo Period, the area was tenryō territory under the direction control of the Tokugawa shogunate due to its proximity to the Iwami Ginzan Silver Mine.

After the Meiji restoration, the village of Kawamoto was established within Ōchi District, Shimane on April 1, 1889 with the creation of the modern municipalities system.

Kawamoto has a mayor-council form of government with a directly elected mayor and a unicameral town council of eight members.

In terms of national politics, the town is part of the Shimane 2nd district of the lower house of the Diet of Japan.

Following the closure of the JR West Sankō Line on April 1, 2018, Kawamoto no longer has any passenger railway service.