Shoshoni was founded as a railroad and mining town at a natural intersection of trade routes. Today, this is the intersection of US Highways 20 and 26, both of which continue to the west as "The Yellowstone Highway." When the gates of Yellowstone National Park are open, the number of visitors in Shoshoni goes way up. A lot of visitors also stop and try their luck fishing at the nearby Boysen State Park. Just north of Shoshoni is the Scenic Byway through Wind River Canyon. Summer sees Shoshoni host the Flywheelers Antique Engine & Tractor Show (every year in June) and the annual Wyoming State Championship Old-time Fiddle Contest (every year on Memorial Day weekend).

Shoshoni was first platted by the Pioneer Townsite Company in 1904. At first the settlement was a tent city, but the Elkhorn Hotel was constructed of wood and opened for business in September, 1905. With a population pushing 2,000, Shoshoni was badly burned in 1907 and again in 1908. After that, nearly all new construction in town has been either stone or brick. At its biggest, Shoshoni offered 2 banks, 2 large mercantiles, a drug store, lumber yard, 2 doctors, several livery and feed stables, a newspaper, many restaurants and lodging houses, and 23 saloons. As with most other towns somewhat based on a mining economy, Shoshoni's fortunes have ebbed and flowed over the years. One thing that helped to keep Shoshoni alive for longer than most old mining camps was the great diversity of minerals available nearby. Different minerals were in vogue at different times, the last big one being uranium for nuclear power plants, back in the 1980's. Since that went bust and uranium mining ground to a halt, Shoshoni's population has been slowly dwindling away.