The county seat (1880, 6,512 feet) was founded by the D&RG just south of then thriving Animas City (c. 1877), which soon was eclipsed and annexed by the railroad town. Animas City lay on the river the Spanish named for lost souls (El Río de Las Animas Perdidas), and when Durango arose two miles downstream it was indeed doomed. William J. Palmer, Alexander C. Hunt, and other D&RG town promoters named Durango after the city in Mexico which they hoped the railroad would reach someday. In the Colorado town, the railroad controlled the land, a smelter site, and nearby coalfields.
D&RG vice president Dr. William A. Bell laid out a planned community, like the D&RG town of Colorado Springs. He platted Durango with two parks, a county courthouse site, church sites, and the 3rd Avenue Parkway residential district on the bluff east of town. By 1890 horsedrawn trolleys clanged up and down Main Avenue. The “sagebrush metropolis,” cheered The Durango Record's feisty editor Caroline Romney, “is really attaining metropolitan proportions.”
Coal-rich Durango boomed as the smelter city of the San Juans, replacing Parrot City as the county seat in 1881. The San Juan Smelter (1881) processed silver and gold ores and later uranium. The later use led the Environmental Protection Agency to demolish the huge brick stack in 1988, remove radioactive dirt from its base, and promote the return of vegetation burned off Smelter Mountain. Since the smelter closed in 1963, Durango has concentrated on tourism. Fort Lewis College, established in 1933, is the town's single largest employer, followed by the Durango-Silverton Narrow Gauge Railroad.
The railroad, which draws some 200,000 passengers a year, has kept Main Avenue the center of activity in Durango, eclipsing even the new, dun-colored Durango Mall south of town. Both Main Avenue and the Third Avenue Residential District between 5th and 15th streets have been set aside as National Register Historic Districts. Durango's suburbs now sprawl northward for 11 miles along U.S. 550 to Hermosa, and along U.S. 160 westward toward Hesperus and eastward to Bayfield.
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