Like that of the other villages in Sanpete County, Gunnison's survival has depended on sustaining an agrarian economy. In the nineteenth century, irrigation brought vegetable crops and sugar beets. The success of sugar as an export crop led to the construction of a sugar beet factory in the valley. Grain crops, alfalfa, and truck farming, together with dairy products, turkeys (for which there is a local processing plant), sheep, and especially beef cattle, have kept the city viable in the twentieth century.

With the coming of the railroad, Gunnison's fortunes prospered and the city's population more than doubled in the decade ending in 1900. As it grew, Gunnison developed as the commercial center of the valley, featuring flour and feed mills, a co-op store, general and specialty stores, and the Gunnison Valley Bank. Religious, civic, and educational facilities were built as the city expanded, including several impressive Mormon and Presbyterian structures in the mid-1880s, a dance hall in 1896, and a new city hall and rock school in 1899. The telegraph had arrived in 1882 and Gunnison officially became a town in 1893. The turn of the century brought the first telephone to town, and in 1910 a new water system was installed and the first power plant was built.