It is renowned for below ground residences, called "dugouts", due to the scorching daytime heat. The name 'Coober Pedy' comes from the local Aboriginal term kupa-piti, which means 'Whiteman’s hole', a waterhole.
The first explorer to pass near the site of Coober Pedy was Scottish born John McDouall Stuart in 1858, but the town was not established until after 1915, when opal was discovered by Willie Hutchison. Miners first moved in around about 1916. By 1999, there were more than 250,000 mine shaft entrances in the area and a law discouraged large-scale mining by allowing each prospector a 165-square-foot (15.3 m2) claim.
The harsh summer desert temperatures mean that many residents prefer to live in caves bored into the hillsides ("dugouts"); they remain a constant temperature, whereas surface living needs air-conditioning, especially during the summer months, when temperatures often exceed 40 degrees Celsius (104 degrees Fahrenheit).
Underground construction continues to this day.