Situated along the banks of the Pecos River, Carlsbad was originally christened the Town of Eddy on September 15, 1888 and organized as a municipal corporation in 1893. With the improvement of the mineral springs with their valuable medicinal qualities north of town, the town changed the name to Carlsbad, after the famous European spa, Karlsbad. On March 25, 1918, the Governor proclaimed Carlsbad as a city.

With the discovery of the "Bat Cave" in 1901 and the establishment of the Carlsbad Caverns National Park on May 14, 1930, Carlsbad gained international recognition.

Carlsbad is located in southeastern New Mexico where Highway 62/180 and Highway 285 intersect.