Before the area was named Cragmore, beginning about 1859, the area was mined for coal. There were 50 coal mines in Colorado Springs. The Cragmor mines were the City Mine, the Altitude, Williamsville Mine, Curtis Mine, Patterson Mine, the Climax mines, the Conley, Busy Bee, and the Danville. Coal was mined using the "room and pillar" method, in which areas of unmined coal acted as pillars while coal was removed from the shafts, creating rooms. Sometimes, rather than leaving the pillar for support, the supporting coal was removed. Coal was mined from fields from one to fourteen feet deep.
Of the city's 50 abandoned mines, 22 have become hazardous because they were "very shallow mines"—some no more than 30 feet (9.1 m) below the surface—that are now subject to sinking under developed land. For instance, the ground gives way after wood that held up the roof of the rooms deteriorates, generally 10 to 20 years after the mines closed. There are also hazards due to mine openings, drainage of metals or other pollutants from the mines, or fires within mines or the outside waste banks. Many of the hazardous, abandoned mines are near Cragmor, such as Cragmor Country Club Estates that had about 3,000 residents in the late 1980s. There were more than 2,400 crack and sinkholes in the Cragmor Country Club Estates area, while there were only a total of seven in other areas of Colorado Springs during a 1985 study supervised by the Colorado Mined Land Reclamation Division.
The area was named by Dr. Edwin Solly, who began plans to build the 100 acre Cragmor Sanatorium in 1902, when William Jackson Palmer donated funds to build a sanatorium. The Cragmor Sanatorium opened in 1905. Located between the bluffs of Palmer Park and Austin Bluffs, he named it for the moors and craigs of Great Britain, which described "where high bluffs join the low plains". Cragmor is located about 300 feet (91 m) in elevation above and 3 miles (4.8 km) northeast of downtown Colorado Springs. Located on a bluff of prairie grass, pines, and ground oaks, the sanatorium's westward view included Pikes Peak and Rampart Range.
In the following decades it developed a following among the cultural elite and many of its patients were wealthy. However, they were hit hard by the Great Depression in the 1930s and Cragmor suffered from financial distress into the 1940s. It was briefly reinvigorated in the 1950s when a contract with the Bureau of Indian Affairs established Cragmor as a treatment center for Navajo people with tuberculosis. About ten years later, the Navajo patients were transferred elsewhere.
Bungalows were built for patients and physicians of the Cragmor Sanatorium in an area named Cragmor Village. It was listed on the National Register of Historic Places by 2013 for its historical significance during the sanatoria era and because it is threatened by plans for expansion of the University of Colorado Colorado Springs (UCCS) campus.