The name Stemnitsa has Slavic roots, meaning "woodland," and the Slavic settlers who gave it that name arrived in the 7th and 8th centuries, long before the town became what it is today. The site itself is older still — Stemnitsa has been identified with the ancient Arcadian city of Hypsous, and its position above the Lousios gorge made it a natural stronghold across every era.

After the fall of Constantinople in 1453 and the Ottoman occupation of the Peloponnese, Stemnitsa's remoteness became its protection. Greek culture and Orthodox religion found refuge here when they were suppressed elsewhere. Churches from this period survive: the church of Bafero was built in 1185 and that of Zoodochos in 1433. Ottoman taxation documents from 1512–1515 record around 120 families in the town; a later Venetian census, the Grimani report, shows Stemnitsa as the most populous village in all of Gortynia, with 925 people.

Stemnitsa built its identity around its craftsmen. The town was known across the Peloponnese for its gold- and silversmiths and for the other skilled trades that clustered around them — the coppersmiths, the shoemakers, the candlemakers whose work is commemorated in the folklore museum. The museum itself, housed in a traditional building near the square, contains Byzantine icons, old costumes, copperware, guns, and jewelry: the full material culture of a working mountain town.

The tradition did not die. Since the 1970s, a publicly funded school of gold and silver smithing has operated in Stemnitsa, training craftspeople in the techniques that made the town famous. Students still learn to work precious metals in workshops that connect directly to that centuries-old lineage. The school draws students from across Greece and has kept the craft alive in the place where it developed its distinctive character.

Seven kilometers from Stemnitsa, the road descends into the ravine of the Lousios until it reaches the monastery of St. John the Baptist — the Prodromos — built around 1167, its walls pressed against the face of a vertical cliff above the river. During the Ottoman period, the monastery served as a center of faith and clandestine education for Greeks who had no other access to learning. Below the monastery, roughly 200 yards down the gorge, the Lousios runs cold and fast. Nearby, excavations have uncovered an ancient hospital dedicated to Asclepius, the god of medicine, suggesting that the gorge was a place of healing long before the monks arrived.

The library of Stemnitsa itself once held around 5,000 volumes — a remarkable collection for a mountain village — until the upheaval of the Greek War of Independence in 1821. What remained became a monument, located next to the town square.

Stemnitsa has produced an improbable number of notable figures for a place of its size. Gennaios Kolokotronis, son of the great revolutionary general Theodoros Kolokotronis, was born here in 1803 and later served as Prime Minister of Greece. Antonis Samaras, a more recent Prime Minister and President of the New Democracy party, also claims Stemnitsa as his ancestral home.

Georgios Roilos, born in 1867, became a professor at the University of Athens and one of the first painters to bring Impressionism to Greek art. His most famous student was Giorgio de Chirico, the founder of Metaphysical painting — an aesthetic lineage that traces back, improbably, to this stone town in Arcadia. Elias Gyftopoulos became Ford Professor Emeritus of Nuclear Engineering at MIT. Dimitrios Thanopoulos won a silver medal in Greco-Roman wrestling at the 1984 Olympics. What the mountain produced, it sent into the world.