The Paiute Indians originally inhabited the Bishop area until white settlers arrived in the mid 19th century. Despite being originally shown on maps as part of Mexico, the Eastern Sierra Nevada region was not inhabited by Mexicans. The city takes its name from one its first European–American settlers, Samuel A. Bishop. It was originally started as a cattle ranching settlement, due to the need for beef to feed the mining boom in surrounding areas at that time. Settlers found the northern Owens Valley was perfect for raising livestock.
In 1861, Samuel Bishop settled in the area and owned a ranch along a creek, known as Bishop Creek. He set up a market to sell beef to the miners and business owners of mining communities. In 1862, the frontier settlement known as Bishop Creek was established and in 1870 a post office opened. In 1903, the city of Bishop was incorporated.
Between 1905 and 1907, William Mulholland, superintendent of the Water Department for the City of Los Angeles, purchased much of the land in the Owens Valley under the guise of a local irrigation project. Water from the Owens River began being diverted south to the city of Los Angeles. The siphoning of water from the Owens River caused the lower Owens River and Owens Lake to dry up completely. This forced many of the valley residents to pack up and leave the area.
Bishop has several famous natives including: Horace M. Albrigth, second director of the National Park Service, who was born in 1890, and Matt Williams, a former All–Star Major League Baseball player, who played third base for the San Francisco Giants, Cleveland Indians, and Arizona Diamondbacks from 1987–2003, was born there in 1965.
Today, the City of Los Angeles receives about 70% of its water supply from the Owens Valley and the Eastern Sierra Nevada Mountains. Bishop's growth is constricted by the amount of land the Los Angeles Department of Water and Power (LADWP) owns in the area. The LADWP offers visitors and locals alike many recreational opportunities including fishing, hunting and camping (in designated areas) on city owned property. Bishop, with 3,500 residents, is now the largest city in Inyo County.