The town of Silverthorne was incorporated on 1967-09-05.

Silverthorne began as a convenient place to move buildings from the site of old Dillon, a town which was relocated prior to being flooded with the waters behind the Dillon Dam. The first post office and general store were both buildings moved from old Dillon.

At least one building in Silverthorne was moved from the town of Kokomo, which was bought by the Climax mine in order to construct a slag pond for their molybdenum mining operation. That building (a former hotel) was placed on the site of the current Eddie Bears store at the approximate center of the town of Silverthorne. Frank and Nellie Flynt converted the old building into Silverthorne's general store, where they did a good amount of business until Frank died in the early 1970s.

Silverthorne's identity was originally envisioned as a four season sports destination when the Dillon Dam, a key source of water for Denver, Colorado, began construction in 1960.

Colorado's Eisenhower Tunnel goes through the Continental Divide near Loveland Pass. The new tunnel linked Silverthorne with Denver by Interstate 70, serving as the thoroughfare to the west, for many major Colorado ski resorts. These ski areas include Keystone, Breckenridge, Copper Mountain, Arapahoe Basin, Vail and Beaver Creek. The new interstate also the location where many commercial businesses in Silverthorne began, including City Market, Silverthorne Factory Outlet Stores, Target and many others. Silverthorne enjoys a high quality of life due to its unique alpine environment, restricted growth, and ample outdoor activities.

Silverthorne is located at 39°38′18″N 106°04′35″W at 8,730 feet above sea level (2661 meters). The town is situated between the Gore Range to the west and the Continental Divide to the east. The two most visible mountains are Buffalo and Red Mountains. Also surrounding the valley are Ptarmigan, Tenderfoot, and Ten Mile Peaks.

According to the United States Census Bureau, the town has a total area of 3.2 square miles (8.3 kmē), of which, 3.2 square miles (8.2 kmē) of it is land and 0.04 square miles (0.1 kmē) of it (0.94%) is water.