A fort that had been constructed on the east side of Center Creek the previous year was an initial hub in the development of ironworks in the region.

Parowan served as the agricultural support base for the local iron industry, whose blast furnace was located in nearby Cedar City.

Petroglyphs, pithouses, arrowheads, pottery, and manos dating from A.D. 750 to 1250 found in the area are evidence that it was on a major thoroughfare of early indigenous peoples.

On January 8, 1850, Pratt had raised a liberty pole at Heap's Spring and dedicated the site as "The City of Little Salt Lake".

Based on Pratt's exploration report, Brigham Young called for the establishment of settlements in the area to produce much-needed iron implements for the pioneer state.

After enduring two bitterly cold nights, they moved across the creek and circled their wagons by Heap's Spring and Pratt's liberty pole, seeking the protection of the hills.

Within days, the settlement organization was completed: companies of men were dispatched to build a road up the canyon, a town site was surveyed and laid into lots, and a fort and a log council house were begun.

Parowan has been called the "Mother Town of the Southwest"[11] because of the many pioneers who left from there to start other communities in southern Utah, Nevada, Arizona, Colorado, and even Oregon and Wyoming.

Parowan's first settlers were instructed to plant crops so that following immigrants could open up the coal and iron ore deposits, but local industries were also developed.

Self-sufficiency was envisioned, and local industries included a tannery, sawmill, cotton mill, and factories for making saddles and harnesses, furniture and cabinets, shoes, and guns; there also were carpentry and blacksmith shops.

Businesses now support Brian Head, a year-round resort 12 miles (19 km) south of town featuring downhill and cross-country skiing in the winter and numerous summer mountain activities.

Other local historic sites include the original town square with the Old Rock Church, the War Memorial and Rose Garden, the Third/Fourth Ward LDS chapel built in 1915, and the Jesse N. Smith Home Museum.

Utah State Route 143 leads south up Parowan Canyon 16 miles (26 km) to Cedar Breaks National Monument.