Opals were first discovered on the White Cliffs paddock of the enormous Momba Station, perhaps as early as 1884 by a group of kangaroo hunters. The name seems to have come from the smudgy white cliffs easily seen by passengers travelling the road from the river port of Wilcannia and the Mt Brown gold fields. Certainly the first leases were taken out in 1890 and there was hope of great wealth. From the first there were problems with lack of water and extreme heat in summer. These conditions made for considerable hardship in the opal fields and led to the town's characteristic underground dwellings, not the first in Australia but the first on any opal field.

The field did not really take off until 1893, the population jumping to about 500. any buildings  were pulled down at the nearby Nuntherungie silver mining township and re-erected at White Cliffs, which had no locally available building materials.

1897 represented the peak of White Cliffs' fortunes. By this time the town had an air of permanence with four hotels, Salvation Army barracks, a public school, permanent water tanks, a new Police Station and its own newspaper, The Western Life. In 1899 there were 2500 miners in White Cliff, with families and service providers making for a much bigger number. The population of miners never got much bigger than this and in 1907-08 some 2 000 people left White Cliffs for the Lightening Ridge field. By 1914 with men leaving to enlist the population had shrunk to about 30!

White Cliffs was proclaimed a town in 1898 but the quality of opal was never sufficiently high to compete at the top end of the international market and the physical difficulties of extraction, especially during the years of drought, meant the diggings struggled. The First World War also had an effect, closing access to the predominantly German opal market.

The experiences of Australian author, Katherine Susanah Prichard, who visited White Cliffs while working at nearby Turella Station as a governess, formed the basis for her novel Black Opal. The first solar power station in Australia was opened at White Cliffs in 1983.

The town never regained the prosperity of the 1890s but the opal continued to attract the hopeful. Today the town has a seasonal population of about 200 and its economy is considerably assisted by the tourist trade.