In 1849, as groups of Mormon colonists began to immigrate to the fertile Sanpete Valley, many of them camped at a verdant location in the northwestern end of the valley known as Uintah Springs. A decade later, George W. Johnson of Santaquin was granted permission to establish a permanent settlement on the popular campgrounds. In July 1859 Albert Petty surveyed a townsite, laying out twenty blocks of about 4.5 acres each. Other pioneers soon joined the Johnson family, building log homes and, in 1860, a multipurpose log meetinghouse. In the same year, an irrigation channel was plowed to a canyon in the San Pitch Mountains just west of town, and the growth of Fountain Green was well under way.

Fountain Green's name is still a fitting description of the lush, green hillside village abundantly watered by what is now called Big Springs and Silver Creek which it forms. Artesian wells and later pumped water provided an ample water supply, allowing the development of agriculture and stock raising, the staple industries of the town from 1860 to the present. In 1865 a sawmill was constructed, followed in 1866 by an adobe meetinghouse and in 1867 by a flour mill. Due to hostilities and one death during the Black Hawk War of 1865-67, a rock fort was erected in 1866. After peace was made with the San Pitch Indians, growth and progress continued unhindered and major crops of wheat, oats, and potatoes were harvested.

Although Fountain Green was the first Sanpete community to receive the railroad in the 1880s, it did not take full advantage of this opportunity, being the only major town in the region to drop in population between 1880 and 1890. Experiencing less fluctuation in size than most other Sanpete villages, Fountain Green reached its zenith of about 1,150 people in 1920, about twice its size of 578 in 1980. It had a population of 602 according to the 1990 census.

Fountain Green's flourishing in the early twentieth century, during which time it was considered the "richest town" in the county, was due mostly to its successful wool growing industry. Expanding from a cooperatively owned herd of Spanish Merino sheep in the 1880s, sheep growers greatly enhanced their profits after upgrading their herds with high wool producing Rambouillet stock.

In 1902, 40,850 sheep were owned by twenty-six growers, for an average of 1,571 head of sheep each, although some owned far more than others. The Fountain Green Woolgrowers Association was founded in 1908 and became the dominant group in town, with the possible exception of the LDS Church, whose members they shared in common. The association created the nationally famous Jericho Pool of 100,000 sheep, giving Fountain Green its nickname, "Wool City." A celebration known as the "City of Lambs Days," is still held annually, although the sheep industry has diminished in importance over the years. In 1987, 47 percent of the farms in northwest Sanpete County raised turkeys, while only 26 percent produced sheep, revealing the economic shift from Fountain Green to Moroni, the center of the county's turkey industry.

From 1869 when a Zion's Cooperative Mercantile Institution store was established along the main highway, a small string of general stores, shops, and public and religious buildings has gradually filled in the modest business district. The ZCMI was initially a profitable venture, delivering a 68 percent dividend in 1870, its first full year of operation. In time, other private co-ops and general mercantiles were founded to offer ZCMI some competition. A general store built of rock in 1880 with an 1884 dance hall and theater addition was the most imposing of the private commercial structures in the early days. By 1885, Fountain Green formally organized its city government, electing Reese R. Llewellyn as the first town president.

A substantial Mormon meetinghouse, built over a thirty-year period beginning in 1880, was the most prominent religious structure in nineteenth-century Fountain Green. A tithing office built in 1906 and a church-built theater and dance hall erected in 1917 allowed for expanded economic and social activity. The influence of the Mormon Church was pervasive, as it remains today, with its Sunday School, Relief Society, choir, children's organizations, and overall concern for the community's welfare and progress. Members of other religious faiths have lived in Fountain Green during much of its history, although no group has managed to establish a permanent foothold. A varied ethnic makeup also helped to shape the town's early nature, with 65.3 percent of its adult married population being foreign-born in 1880.

The twentieth century brought incorporation as a city in 1910, plus several new improvements for Fountain Green, including a large elementary school in 1907, an improved water system in 1913 (updated in 1935), a high school in 1920, a city park in 1935, and a state fish hatchery in 1939-40. In recent decades, new religious, educational, and business facilities, together with the restoration and new construction of residences, mark Fountain Green's continued vitality.

A drive down Fountain Green's Main Street and up the hilly lanes of the square blocks to the west helps one understand the community's story. An outstanding collection of red brick homes stands witness to the town's once-thriving brick industry. The two-story elementary school and the fine brick tithing office on Main Street also remain along with impressive residences such as the Hans Peter Olsen home (on the National Register). Many of the log, adobe, and brick houses are vacant now, but their varied architecture testifies to the ingenuity and talent of their builders. Although there may be more buildings than people in Fountain Green--evidence of years of gradual out-migration, a trend that seems to have stabilized in the last decade--the town remains a vital part of Sanpete County.