Gatooma was founded in the 1890s as a mining camp, and constituted under a village management board in 1907. In 1917 the Gatooma municipality was created. Although previously reported here as being named after the nearby kraal of Chief Katuma, there is more likely a connection to the mining town in Australia located west of Sydney in the Blue Mountains of New South Wales called Katoomba, that was established in 1877. Ka-toom-ba is Aboriginal for "shining falling water", and takes its name from a waterfall that drops into the Jamison Valley below the Harry's Ampitheatre escarpment in that Australian region. Kadoma's (Gatooma's) original mining engineers, who developed the mines there, came from Australia in connection with the Rio Tinto Group. The name "Gatooma" was most likely a phonetic spelling of "Katoomba" as spoken by Australian settlers.
The Specks Hotel was opened in 1907, and Jameson High School started the same year when Mrs Amelia Fitt, wife of the first mayor of Kadoma started to give classes to the town children in her house. A public electricity supply was introduced in Kadoma in 1922. The Grand Hotel opened in 1925 and had a sprung floor for dancing, the first such floor in Zimbabwe.
The city is at the centre of a mining area, which provides gold, copper, nickel.The most significant mine of the region is the Cam and Motor Mine, which is in Eiffel Flats 7km outside Kadoma. Under the present regime, Cam and Motor is owned by Rio Tinto Zimbabwe. Cam and Motor is the largest gold producer in Rhodesia-Zimbabwe's history.