The modern city of Kurashiki was founded on April 1, 1928. Previously, it was the site of clashes between the Taira and Minamoto clans during the Heian period. It gradually developed as a river port. During the Edo period, it became an area directly controlled by the shogunate. Distinctive white-walled, black-tiled warehouses were built to store goods. During the Meiji Restoration (Japan's Industrial Revolution period), factories were built, including the Ohara Spinning Mill which still stands as the nostalgic tourist attraction Ivy Square.
The old merchant quarter is called the Bikan historical area. It contains many fine examples of 17th century wooden warehouses (kura, 倉) painted white with traditional black tiles, along a canal framed with weeping willows and filled with koi. The area has no electric poles in order to make the area more closely resemble the look of the Meiji period. One of the city's former town halls was located in the Kurashiki Kan, a European style building constructed in 1917.
In 1998 a theme park called Tivoli (after the park of the same name in Copenhagen) opened near Kurashiki Station. After ten years of operation it was closed in 2008, with a massive debt.