The town was established in the late 19th century when opal was discovered. Opal has been mined ever since. The first Australian opal was found 20 years before in Queensland in 1872, when a party of kangaroo hunters were operating in the White Cliffs area. One of them, who had left the party to track down a wounded kangaroo over some low stony hills, picked up a pretty stone which appealed to him. When taking back the stone, they suspected it could be opal which the local jeweler confirmed. He was advised to get as much opal as possible since this could be more profitable than kangaroo hunting. When the group filed a claim, opal had not yet been listed under gemstones, and it was decided to file the claim under the "Gold Mining Act".
Many of the residents live underground, using mining equipment to dig extensive homes in the hillside to avoid the intense heat outside. There is an underground motel called The White Cliffs Underground, as the town is becoming more dependent on tourism. Cricketer Bill O’Reilly was born in White Cliffs, the son of the first school teacher.
White Cliffs is the site of Australia's first solar power station. The White Cliffs Solar Power Station was built in 1981 producing 25 KWe and upgraded in 1996 to produce 45KWe using the same collector dishes but better technology.