Ofakim was established in 1955 as an urban center for the rural communities in the area. Its first inhabitants were immigrants from Morocco and Tunisia, later joined by newcomers from Egypt, Iran, India, and Romania and, in the 1990s, from the former Soviet Union and Ethiopia. Established as a development town, Ofakim was a major textile manufacturing center for many years. Outsourcing of textile manufacturing outside Israel caused economic stagnation, and Ofakim suffered high poverty and unemployment rates for many years. Since then, new factories have moved in, and the city is undergoing major development.