The city was founded in 1895 by three brothers of the Nel family who grazed their cattle around the site in the winter months.
 
During the Boer War, Nelspruit served briefly as the seat of government for the South African Republic, an independent Boer republic (not to be confused with the Republic of South Africa).
 
The settlement was a key stopover for the Eastern Railway built by the Netherlands-South African Railway Company in the late 19th century which ran from the newly discovered Witwatersrand goldfields to Delagoa Bay in Portuguese East Africa (modern-day Maputo, Mozambique).
 
The discovery of gold in Mpumalanga, such as at Pilgrim's Rest and Barberton, encouraged further development.