Holmium was discovered by Per Theodor Cleve, a Swedish chemist, in 1879. Cleve used the same method Carl Gustaf Mosander used to discover lanthanum, erbium and terbium, he looked for impurities in the oxides of other rare earth elements. He started with erbia, the oxide of erbium (Er₂O₃), and removed all of the known contaminants. After further processing, he obtained two new materials, one brown and the other green. Cleve named the brown material holmia and the green material thulia. Holmia is the oxide of the element holmium and thulia is the oxide of the element thulium. Holmium's absorption spectrum was observed earlier that year by J. L. Soret and M. Delafontaine, Swiss chemists. Today, holmium is primarily obtained through an ion exchange process from monazite sand ((Ce, La, Th, Nd, Y)PO₄), a material rich in rare earth elements that can contain as much as 0.05% holmium.

Holmium has no commercial applications, although it has unusual magnetic properties that could be exploited in the future.

Holmium forms no commercially important compounds. Some of holmium's compounds include: holmium oxide (Ho₂O₃), holmium fluoride (HoF₃) and holmium iodide (HoI₃).