Tierra Amarilla was originally settled as part of the Tierra Amarilla Land Grant. It has seen more prosperous days in the past although the locating of the county offices here has helped to sustain the local economy.

Although the area has calmed down some now, back in 1967, Reyes Tijerina and the Alianza Federal de Mercedes were fighting a shooting war with county, state and federal officials here. That led to the area being occupied by the New Mexico National Guard for several months.