Pagosa Springs is located approximately 35 miles (56 km) north of the New Mexico border, at 7,126 feet (2,172 m) above sea level on the Western Slope of the Continental Divide.

This combination of high desert plateau and the Rocky Mountains to the north and east creates an unusually mild climate, especially in the summer months.

However, the hospital project was cancelled, and the lands platted by the U.S. Army were sold to private parties who capitalized on the thermal mineral springs.

[13] In the late 1880s, Dr. Mary Winter Fisher ventured west from Chicago to found a medical and healing practice in Pagosa Springs.

[15][16] In the 1930s, Cora Woods built a geothermal swimming pool and several small cabins on the Northeast corner of land she purchased from Bill Lynn, a local entrepreneur.

[13] In the 1980s, Pagosa Springs received federal funding from the Department of Energy to drill two geothermal wells to heat buildings in the small downtown area of town.

[20] The area around Pagosa Springs has numerous large waterfalls, including Treasure Falls to the east of town off of Hwy 160 just past the Wolf Creek Pass summit.

[citation needed] "Downtown Pagosa Springs" was the final destination for a duo of truckers in the 1975 country song "Wolf Creek Pass" by C. W. McCall.

From Wolf Creek pass to town, U.S. Highway 160 goes through a vertical drop of 3,730 feet (1,140 m), and is described in the song as "hairpin county and switchback city".