In 1908, in what was then German South-West Africa, the worker Zacharias Lewala found a diamond while working in this area and showed it to his supervisor, the German railway inspector August Stauch. Realizing the area was rich in diamonds, German miners settled, and soon after the German Empire declared a large area as a "Sperrgebiet", starting to exploit the diamond field.[1]

Driven by the enormous wealth of the first diamond miners, the residents built the village in the architectural style of a German town, with amenities and institutions including a hospital, ballroom, power station, school, skittle-alley, theatre and sport-hall, casino, ice factory and the first x-ray-station in the southern hemisphere, as well as the first tram in Africa.

Kolmanskop had a railway link to Lüderitz, and was also the terminus of two private narrow-gauge electrified railway lines that served the diamond mining industry further south. One ran 119 kilometres (74 mi) via Pomona to Bogenfels. It was completed in 1913 but destroyed in World War I in 1915 by South African troops. The other railway line, 7 kilometres (4.3 mi) long and completed in 1920, led to Charlottental. Both were powered by a 1.5 megawatts (2,000 hp) power station in Lüderitz, then assumed to be the largest in Africa.[2][3]

The town started to decline during World War I when the diamond-field slowly started to deplete. By the early 1920s, the area was in a severe decline. Hastening the town's demise was the discovery in 1928 of the richest diamond-bearing deposits ever known, on the beach terraces 270 km south of Kolmanskop, near the Orange River. Many of the town's inhabitants joined the rush to the south, leaving their homes and possessions behind. The new diamond find merely required scouting the beaches as opposed to more difficult mining. The town was ultimately abandoned in 1956. The geological forces of the desert mean that tourists now walk through houses knee-deep in sand. Kolmanskop is popular with photographers for its settings of the desert sands' reclaiming this once-thriving town, and the arid climate preserving the traditional Edwardian architecture in the area. Due to its location within the restricted area (Sperrgebiet) of the Namib desert, tourists need a permit to enter the town.