For many years it was a major textile manufacturing center until outsourcing led to the closure of factories.

In 2023, Ofakim was attacked by Hamas terrorists who infiltrated the city and killed 47 residents.

[2] Prior to 1948, the area was known as Khirbat Futais (Arabic: خربة فطيس), a Bedouin hamlet populated by members of Al-Qadirat clan of Al-Tiyaha tribe, located along "Wadi Futeis", a seasonal river that drains into Wadi Gaza.

The Bedouins grew wheat, barley, and melon, and tended flocks of sheep and goats.

[4] According to Benny Morris, the abandoned hamlet was destroyed in September or October 1948 for military reasons.

[5] Ofakim was established in 1955 on the site as an urban center for rural communities in the south.

In the late 1950s, the construction industry was still the main employer, and some residents also worked in agriculture nearby, but industry also began to be established in Ofakim, starting with a diamond polishing plant, followed by two textile factories that opened in 1959.

At the same time, the town's streets were paved, public parks were established, and schools were founded.

As in other development towns, the industrial sector historically played an important part in Ofakim's economy.

Ofakim's economy declined after Israeli textile manufacturers began closing their factories in Israel to move their production to other countries with lower labor costs, mainly in Southwest Asia, and to Egypt and Jordan after Israel signed peace treaties with those two countries.

Starting in the mid-1980s, the city's textile mills began to shut down, with the last one closing in 1995, rendering much of the population unemployed.

A few more plants moved into the city in the 1990s, including an electronics factory in 1996, but unemployment remained high.

[11] In 2008, Haaretz reported: "Nearly one-third of the inhabitants are supported by the welfare department and hundreds of families receive aid, including food, from non-profit organizations.

Ofakim was infiltrated by Hamas forces on 7 October during the 2023 Hamas-led attack on Israel.

In addition, there are small communities of Ethiopian Jews and Palestinians originally from the Gaza Strip who were resettled in Israel after collaborating with Israeli authorities.

[19] The rail line connects Ofakim to Beersheba in the Southeast, and to Ashkelon and beyond to Greater Tel Aviv in the Northwest.

[12] Next to the train station, a new neighborhood specially designed to have affordable prices for young people, is being built as part of the "Noah Initiative", which was started by activists from Tel Aviv.