A group of unsuccessful miners founded the city in February 1876, after failing to find gold in the Black Hills. It was eventually named for the spring-fed Rapid Creek that flows through it.

Rapid City is known as the "City of Presidents" because of the life-size bronze statues of past U.S. presidents that line the city's streets and sidewalks. Each sculpture is privately funded, and the pattern of placement was chosen to maintain orderly structure and eliminate any sense of favoritism or political gain.

Rapid City is located in the shadow of Black Elk Peak, which at 7,242 feet (2,207 m) is the highest point east of the Rocky Mountains. It is named after Black Elk, the noted Lakota Sioux medicine man who survived the Wounded Knee Massacre and traveled in Europe as part of Buffalo Bill's Wild West Show.

If the existence of a Berlin Wall memorial in Rapid City seems random, well, that's mostly because it is. There was no particular motivation for bringing a piece of the wall to the city, other than a whim, according to the man who made it happen. "It was just a neat thing for us to have out here," 81-year-old Dale Clement recalled in 2014. The pieces of the wall were installed in Memorial Park in 1996.

In 1922, the chamber of commerce invited the Vatican to move to Rapid City. The Pope did not reply. In the early 1930s, the chamber sent a letter inviting Al Capone to live in the Black Hills. South Dakota's governor did not support the idea, and Capone declined. In 1950, recognizing that the government was all huddled together in Washington D.C. and ripe for destruction by an H-bomb, the chamber made another magnanimous offer: move the U.S. capital to Rapid City, "the most interior spot on the continent." The response from Washington was not encouraging, with U.S. Representative Emanuel Celler, Chairman of the House Judiciary Committee, responding simply, "I shall be pleased to keep your letter."

In 1980, the Supreme Court of the United States ruled in United States v. Sioux Nation of Indians that the federal government had illegally stolen the Black Hills, including the area occupied by Rapid City, from the Sioux people when it unilaterally broke a treaty guaranteeing the Black Hills to them. As a result, the federal government offered a financial settlement, but the Lakota Sioux declined on the principle that the theft of their land should not be validated. They still demand the return of the land.

Rapid City holds a record for an extreme temperature drop of 47 °F in five minutes on January 10, 1911, from 60 °F to 13 °F.

The Black Hills Flood of 1972, also known as the Rapid City Flood, was the worst natural disaster in South Dakota history. Severe flooding of residential and commercial properties in Rapid City occurred when Canyon Lake Dam became clogged with debris and failed in the late evening hours of June 9 resulting in 238 deaths and 3,057 injuries. Over 1,335 homes and 5,000 automobiles were destroyed.

Valentine McGillycuddy was considered controversial for his efforts to build a sustainable relationship between the United States and Native American peoples. He treated Crazy Horse after he was fatally stabbed by guards who said he was trying to escape. After Crazy Horse's death, McGillycuddy went to Washington D.C. to lobby for more humane treatment of Indians at Fort Robinson. Following his own death in 1939, McGillycuddy was cremated, and his ashes were entombed at the top of Black Elk Peak, along with a plaque that reads: "Valentine T. McGillycuddy, 'Wasicu Wakan', 1849-1939" (In Lakota, Wasicu Wakan means "Holy White Man").

The annual Black Hills PowWow, or He Sapa Wacipi Na Oskate, is one of the premier Native American events in the U.S., filled with singing, dancing, drum groups, art shows, hand games, athletic competitions and a variety of other events. For both locals and out-of-towners, the Powwow offers a way to interact with and learn about the Native American culture firsthand.