Cold air rushing out of a limestone sinkhole atop a big hill west of Luray, Virginia, blew out a candle held by Andrew Campbell, the town tinsmith, on the morning of August 13, 1878. So began the discovery of Luray Caverns. Campbell, three other men, and his 13-year-old nephew, Quint, were exploring the area, looking for a cave. With the help of local photographer Benton Stebbins, the men dug away loose rocks for four hours before, candle in hand, Campbell and Quint slid down a rope into the cave. They could scarcely believe what they saw. The party had discovered the largest series of caverns in the East, an eerie world of stalactites and stalagmites seen by the light of a candle.

At the time of the discovery, Sam Buracker of Luray owned the land on which the cavern entrance was found. Because of uncollected debts, a court-ordered auction of all his land was held on September 14, 1878. Andrew Campbell, William Campbell, and Benton Stebbins purchased the cave tract, keeping their discovery secret until after the sale. Because the true value of the property was not realized until after the purchase by the Campbells and Stebbins, court battles raged for two years attempting to prove fraud and decide rightful ownership. In April of 1881, the Supreme Court of Virginia nullified the purchase by the explorers. William T. Biedler of Baltimore, Sam Buracker's in-law and major creditor, then sold the property to The Luray Cave and Hotel Company, a subsidiary of the Shenandoah Railroad Company, which later became the Norfolk and Western Railroad Company in April of 1881.

David Kagery of Luray and George Marshall of Uniontown, Pennsylvania, purchased the property in July 1890. In October 1890, the tract was sold to the Valley Land and Improvement Company. Under bankruptcy proceedings in 1893, the property was bought by Luray Caverns Company, headed by J. Kemp Bartlett of Baltimore.

Despite the land disputes, news of the caverns' impressive formations spread quickly. Professor Jerome J. Collins, the explorer, postponed his departure on a North Pole expedition to visit the caverns. The Smithsonian Institution sent a delegation of nine scientists to examine them as well, praising them for their stalactite and stalagmite ornamentation. The Encyclopedia Britannica at the time devoted an unprecedented page and a half to the cave's wonders. Many considered it to be the find of the century. Alexander J. Brand, Jr., a correspondent for the New York Times, was the first travel writer to visit Luray Caverns. "It's a magnificent cave,” he told townspeople. "The most beautiful I've ever seen. Trying to compare your cave to others would be like comparing New York City to the Town of Luray." With those words, the public's interest in visiting the caverns began.

In 1901, Colonel T.C. Northcott leased Luray Caverns and built a sanitarium, "Limair," billed as the first air-conditioned home in America. By installing a shaft five feet in diameter down to a cavern chamber and installing a 42-inch fan powered by a five-horsepower electric motor, the system could change the air throughout the entire house every four minutes. The cool air was naturally bacteria-free, as it was filtered through the limestone walls of the cave, which removed dust and pollen, making it ideal for those with respiratory illnesses. On the hottest day in summer, the interior of the house was kept at a cool and comfortable 70 degrees.

The Luray Caverns Corporation, which was chartered by Northcott, finally purchased the caverns property in February 1905 and continues to hold it today.

In 1974, the National Park Service and the Department of Interior designated Luray Caverns as a Registered Natural Landmark. The announcement proclaimed that the site possessed exceptional value as an illustration of the Nation's natural heritage and contributed to a better understanding of man's environment.