Yellow Medicine County was created by legislative act on March 6, 1871. This act was approved by the voters in November 1871. A board of three county commissioners met on January 1, 1872 in Yellow Medicine City, which was then the largest settlement and had been named the county seat. In 1874, Granite Falls was named and has continued to be the county seat.

            Prior to 1850, Yellow Medicine, one of the historically important counties of Minnesota, was part of Redwood County and under federal jurisdiction as Indian territory. In 1852, Dr. Thomas Williamson, a medical missionary of the Presbyterian Church, established the Pejuhutazizi Mission. This Indian name means Yellow Medicine, the name of the bitter root of the Moon­seed plant used by the Indians for medicinal purposes. In 1854, Rev. Stephen R. Riggs, a Congregationalist, established the Hazel Creek Mission. These two missions were located about five miles south of Granite Falls in what is now Minnesota Falls Township. The government established the Upper Sioux Agency in 1854 in what is now Sioux Agency Township. According to the treaties of 1850, when tribes of the Sioux surrendered title to their lands in Minnesota, a tract of land ten miles wide on each side of the Minnesota River was reserved as Indian territory. During the Sioux uprising of 1862, the Agency, missions, and all white settlements were destroyed and as a result of the uprising the Indian lands were declared forfeit. White settlement began again in 1865.

            The county has an area of 758 square miles. Hammer shaped, the county is 54 miles long from east to west and from 12 miles north and south at the west end to 21 miles at the eastern boundary. The mean elevation is 1,165 feet above sea level falling to 845 feet at the Minnesota River. The soil for the most part is good black prairie till. Underlying the glacial drift, which covers the entire county, is an irregular layer of rock which crops out along the Minnesota River in the east end. The average mean temperature is about 45 degrees; the average rainfall is 25.13 inches; the average snowfall 41.2 inches. The land is well watered and drained by the Minnesota River and its tributaries; the Lac Qui Parle and the Yellow Medicine River. The Minnesota River has two waterfalls, one at Granite Falls and the other at Minnesota Falls. From these, waterpower was developed early in the county's history. This power is now used by a municipal power plant at Granite Falls. A large plant established by Northern States Power in Chippewa County but within the city limits of Granite Falls uses coal and natural gas to produce electricity.

            The early settlers were predominantly English, Scandinavian, and German with smaller settlements of Irish, Scotch, and Bohemian. The 2000 census lists the population of the county at 11,080. There are twenty-one townships and the cities of Granite Falls, Canby, Clarkfield, Wood Lake, Hanley Falls, Hazel Run, Echo, Porter, and St. Leo. An Indian settlement of about 150 people is located three miles south of Granite Falls.