The history of Lençóis epitomizes the story of the diamond boom and subsequent bust. After earlier expeditions by bandeirantes (Paulista explorers and hired guns) proved fruitless, the first diamonds were found in Chapada Velha in 1822. After large strikes in the Rio Mucujê in 1844, a motley collection of prospectors from across Brazil arrived seeking their fortunes.

Miners began searching for diamonds in alluvial deposits. They settled in makeshift tents, which, from the hills above, looked like bedsheets drying in the wind – hence the town’s name: Lençóis (Sheets). The tents of these diamond prospectors grew into villages: Vila Velha de Palmeiras, Andaraí, Piatã, Igatu and Lençóis. Exaggerated stories of endless riches in the Diamantina mines precipitated mass migrations, but the area proved rich in clouded industrial stones, not display-quality gems.

At the height of the diamond boom, the French – who purchased diamonds and used them to drill the Panama Canal (1881–89), St Gothard Tunnel and London Underground – built a vice-consulate in Lençóis. French fashions and bons mots made their way into town, but with the depletion of diamonds, the falloff in French demand and the newly discovered South African mines, the boom went bust at the beginning of the 20th century.

Despite these developments, mining held on. Powerful and destructive water pumps were introduced in the 1980s, which increased production until they were finally banned in 1995. The few remaining miners have returned to traditional methods to extract diamonds from the riverbeds. With the establishment of the national park in 1985, the town’s economy turned instead to tourism, which continues to be the major industry of Lençóis.