Thulium 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. Today, thulium 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 0.007% thulium.

Thulium is the least abundant of the naturally occurring rare earth elements. Metallic thulium is relatively expensive and has only recently become available. It currently has no commercial applications, although one of its isotopes, thulium-169, could be used as a radiation source for portable X-ray machines.

Thulium forms no commercially important compounds. Some of thulium's compounds include: thulium oxide (Tm₂O₃), thulium fluoride (TmF₃) and thulium iodide (TmI₃).