The first Europeans to visit the Youanmi area were the Robert Austin party in 1854, followed by John Forrest's expedition in 1869, which passed through in search of Ludwig Leichhardt and his party.
Gold was discovered at Youanmi in 1894 or 1895 by prospector Tom Payne. The discovery site was the Golden Crown Mine. Activity in subsequent years was subdued until a major movement of prospectors into the area in late 1907.

Early History

By 1908, the Youanmi Gold Mine was set up and in 1909 Bewick Moreing, a British mining engineering firm that became a significant company in the WA gold mining industry, arrived and the local population grew to such an extent that the local Youanmi Progress Committee requested the declaration of a townsite in 1910. Following the survey of lots, the townsite was gazetted in August 1910.

The name Youanmi was first recorded by a surveyor in 1887, as the name of a local spring, pointed out to him by a local Aboriginal accompanying him. Other sources suggest it relates to a type of mulga tree located around the spring or the bob tailed goanna, the Aboriginal name of which is "Youan" or "Uan". The town's name was originally spelt Yuani, which was thought to correctly represent the Aboriginal name, but this was soon dropped in favour of Youanmi.
Cobb & Co introduced a weekly motor car service from Sandstone in about October 1909 and by July 1909 a bike mail service was established between White Well and Youanmi.

The Youanmi Gold Mine Limited operated the mine from 1911 but struggled during World War One. In 1914, there was a miner’s strike against Bewick Moreing using contract work and because of the outbreak of war, shortage of labour and rising costs, and finally closed in 1922. It employed around 100 men.
In 1934, the Youanmi Gold Mining Limited was floated in London with the intention of re-opening the mine as an underground operation. Production started in 1936. The Sunday Times of 6 June 1937, in the article Youanmi Reborn From 20 People to 800 in 3 Years gave details of the new venture. In 1942, the mine suddenly closed, citing poor ore at depth. There was a chaotic exodus from the town which was abandoned on a permanent basis.