During the Middle Ages it was part of the district of Saanen (Gessenay) belonging to the Savoyard county of Gruyère. The village core developed at the fork in the trails into the Valais and Vaud. It had an inn, a warehouse for storing trade goods and oxen to help pull wagons over the alpine passes by the 13th-14th centuries. The St. Nicholas chapel was built in the village in 1402, while the murals are from the second half of the 15th century. The village was dominated by cattle farming and agriculture until the great fire of 1898. It was then rebuilt to support the growing tourism industry. The construction of the Montreux-Oberland Bernois rail road in 1905 and the construction of ski runs (the Ski Club of Saanen open in 1905 followed in 1907 by the Ski Club of Gstaad). The first ski school in Gstaad opened in 1923. In a short time there were more than 1,000 hotel beds in the region.
The residents, hoteliers, shopkeepers and tourist offices helped to promote Gstaad to international attention. They supported the construction of ice rinks, tennis courts, swimming pools, ski jumps and ski and hiking areas. The first ski lifts at Funi opened in 1934-44, and was followed by a number of gondolas, ski and chair lifts. The Gstaad Palace opened in 1913 as Gstaad's first luxury hotel. In 1942 the Saanen-Gstaad airfield was opened for military and civil aviation. Helicopter rides were added later and in 1980 balloon flights became available as well. During the World Wars and the Great Depression, the tourism industry suffered and many hotels closed. After World War II, many of the large hotels remained closed, but they were replaced with a number of smaller non-hotel accommodation (chalets, apartment houses, residences). Most of the modern resorts and small hotels are built out of wood and retain traditional design elements.
The Gstaad Polo Club was founded in 1992.
According to the Köppen Climate Classification system, Gstaad has a humid continental climate, abbreviated "Dfb" on climate maps.
Situated in the Berner Oberland, Gstaad is home to one of the largest ski areas in the Alps (220 km (137 mi) of slopes). The middle of the village features a picturesque promenade bounded by numerous shops, restaurants, art galleries, and hotels. Designer labels including Louis Vuitton, Hermes, Chopard, Brunello Cucinelli, Prada, Moncler, Ralph Lauren, and Cartier all have stores in Gstaad, while many smaller boutiques stock labels such as Chloe, Dolce & Gabbana, Tod's, Burberry, Dior, Oscar de la Renta, and Marc Jacobs.
Long known for its walking and hiking trails of varying degrees of difficulty, the mountain air and ambiance attracts guests year round from around the world. Gstaad is also known for its ski and cross-country slopes and winter hiking trails.
Gstaad, named "The Place" by Time magazine in the 1960s, is widely known for its famous part-time residents and vacationers. Famous regular visitors to Gstaad have included Madonna, Prince Charles and Princess Diana, former UN Secretary-General Kofi Annan, Bollywood actor Saif Ali Khan and his wife Kareena Kapoor Khan, haute couture designer Valentino Garavani, writer William F. Buckley, Jr., and various members of the House of Cavendish. Many British bands and musicians would play at L'Atelier, a club in Gstaad, in the 1960s and 1970s; one such band was Merlin 'Q' (later Edison Lighthouse), who stayed a whole winter.
Gstaad is known for its luxury hotels, among them the Grand Hotel Park, the Alpina Gstaad, the Gstaad Palace, the Grand Hotel Bellevue, the Hotel Olden, and the Arc En Ciel.
In Gstaad, the following regular events are held:
Several boarding schools are located in or have a campus in Gstaad:
Gstaad International School, formerly in Gstaad, closed in June, 2014. It is scheduled to be redeveloped into an all-boys' school, Surval Gstaad.
Current and former residents of Gstaad include: Alinghi yachting syndicate boss Ernesto Bertarelli and actress Julie Andrews, Formula One Holdings owner Bernie Ecclestone, French actress Jeanne Moreau, French singer Johnny Hallyday, columnist Taki Theodoracopulos, actors Elizabeth Taylor, Sir Roger Moore, Jane Randolph and Peter Sellers, children's author Richard Scarry, businessmen George Soros and Steve Wynn, director Roman Polanski, violinist Yehudi Menuhin, Prince Rainier and Grace Kelly, modern artist Balthus, Mohammad Reza Pahlavi, British jewellery designer Andrew Grima, Swiss philanthropist Philipp Braunwalder and Filip Peters.