Colstrip is known as the "energy capital of Montana" and was born in 1924 when the Northern Pacific Railroad started mining coal nearby to fuel their steam locomotives. During this time Colstrip consisted of 63 homes, a schoolhouse, two churches, a mess hall, and a boarding house. Once the railroads switched from coal to diesel fuel, however, the mine closed and Colstrip was left nearly abandoned. When Montana Power Company purchased the mine as well as the town site of Colstrip things turned around. In 1968, a subsidiary of MPC, Western Energy Company, started to mine and just a few years later construction on the power plant began.

"Construction Days" of the power plant brought thousands of people to a once dying community. Many of these people lived in travel trailers and campers with their entire families. Once all four units were completed in 1983, the population leveled off and in 1999 Colstrip became a city, complete with mayor and City Council. Colstrip settled into a quiet family community.

Today, Colstrip is a quiet, closely knit community with over 2,000 citizens and 22 parks. The power plant is now owned by PPL Montana.The Schoolhouse History & Art Center, the town's original schoolhouse built in 1924, now serves as the visitor center, an art gallery, and also provides tours of the coal mine from May to October. The building contains one gallery for the Colstrip area historical photographs, which tell the story of strip-mining in southeastern Montana from the 1920s to the present, and another for rotating art exhibits.

On the edge of town is the picturesque Castle Rock Lake, where fishermen from across the state flock to catch walleye, pike and bass. The lake is surrounded by bike paths and picnic areas for summer fun.