Krynica (known earlier as Krzenycze) had existed before 1547, which is evidenced by the privilege of granting a village administrator's office to Danek from Miastko (nowadays Tylicz). The town's further development is connected with the 17th-century discovery of the curative properties of mineral springs. The health resort started operation in 1804 with Mały Domek (the Little House) housing the first baths. In 1807, Krynica was officially called a "Bath Spa" and since then the first doctor started receiving patients there.

The great era of Krynica as a health resort began in 1856 thanks to Józef Dietl, a professor at the Jagiellonian University, considered the father of the Polish balneology. Since 1858, Krynica's guests could enjoy peat baths there, and Mr Dietl's successors contributed to the health resort's further development. At that time, a number of spa facilities were built, including: Stare Łazienki Mineralne (the Old Mineral Baths), Stare Łazienki Borowinowe (the Old Peat Baths), Dom Zdrojowy (the Spa House) and Pijalnia Główna (the Main Pump Room).

Another factor contributing to the town?s development was a railway line to Muszyna, built in 1876 and extended to Krynica in 1911. Towards the end of the 19th century, Krynica became a trendy place for elites and an important meeting point for many outstanding Poles, such as: Jan Matejko and Artur Grottger (both counted among the most famous Polish painters), Henryk Sienkiewicz (a Nobel-Prize winning novelist), Józef Ignacy Kraszewski (a prolific novelist on Polish history), Ludwik Solski (a renowned Polish actor and theatre manager), Helena Modrzejewska (a Polish actress of outstanding beauty, who gained a reputation as a leading female interpreter of Shakespeare on the American stage), Władysław Reymont (a writer), Konstanty Ildefons Gałczyński (a poet) and Jan Kiepura (a recognised tenor and owner of a well-known PATRIA Hotel in Krynica-Zdrój). Today, Krynica celebrates Kiepura's name during the annual European Jan Kiepura Festival.

Both Solski and Modrzejewska had performed on the stage in the Larch Theatre (unfortunately burnt down in 1943). Krynica is also recognised for an activity of Nikifor of Krynica (born Epifan Drowniak), a primitivist painter living and working in this town in 1950's and 1960's, whose primitivist works of art became a true sensation.

Today, it is hard to imagine Krynica without Nikifor's paintings, the collection of which is stored in the Museum of Nikifor, set up in 1995 in Villa Romanówka. After World War I, the authorities of Poland took possession of the health resort. A number of buildings were restored during that time, with many new ones built, including Nowe Łazienki Mineralne (the New Mineral Baths) and Nowy Dom Zdrojowy (the New Spa House). Also at that time, the hostel on the Jaworzyna Krynicka Mountain was built, as well as the cable railway to the Parkowa Mountain, the winter stadium and the luge run. Krynica became a centre of winter sports, hosting the European Luging Championships and, for the first time in Poland, the World Ice Hockey Championships, organised in 1931.

The development of the spa was interrupted by World War II. After the war, Krynica was extended by new sanatoria, as well as the physiotherapeutic centre and the Main Pump Room with a concert hall. At that time, Krynica became the biggest health resort in Poland.