The town began at a ford across the Storå, the river the Danes call Storåen — "the large creek," a modest name for a watercourse of nearly 100 kilometres. A bridge replaced the ford, traffic stopped where the bridge was, and a settlement grew there. The name probably comes from holdested ved broen: a resting place by the bridge.

Holstebro first appears in the written record in a letter from Bishop Thyge of Ribe in 1274. A large fire in 1552 destroyed much of what had been built by then, which is part of the reason the centre today reads as a modern town rather than a medieval one. The river still cuts through the middle of it, and in summer the Storå fills with canoes and kayaks — paddling is permitted between 15 June and 31 October, and much of the town's leisure life happens on the water.

The cultural campaign happened fast. In 1965 the municipality founded Holstebro Kunstmuseum on its own initiative, appointing the art historian and writer Poul Vad as its art consultant — a post he held until 1981 — and letting him set the collecting ideology. Vad's principle was depth rather than breadth: fewer artists, held seriously, instead of a thin survey. The collection covers Danish and international twentieth-century art and craft, contemporary work, and traditional art from non-Western cultures, with Henry Heerup and other COBRA figures, John Olsen and Tal R among the names. It occupies a 1906 manor house built for the tobacco manufacturer Søren Færch, extended by a wing in 1981 and by Hanne Kjærholm's Færchfløjen in 2011. It opened to the public on 5 May 1967.

1966 was the decisive year. The Giacometti was bought. The Holstebro Hall was rebuilt. And the municipality invited a barely known theatre company then based in Oslo to come and set up a laboratory in an old farm. That company was Odin Teatret, and it is still here.

What the strategy produced is unusually visible for a town this size. The centre carries a large network of pedestrian streets on both banks of the Storå, threaded with outdoor sculpture and looking out on the town church and the town hall. The Holstebro Hall houses a music theatre; the Holstebro Convention and Culture Center opened alongside it in 1991. Between them they run more than a hundred cultural events a year and draw over 100,000 visits.

From 1997 to 2009 the town also hosted the Peter Schaufuss Ballet, an internationally recognised company operating out of a place most ballet audiences could not find on a map. Every late summer the Holstebro Festive Week takes over the centre. The Holstebro Museum handles the town's own history, which is a good deal older than its reputation.

In February 1962 a high-end F3 tornado tore through part of Holstebro — the most devastating tornado in Denmark's recorded history and the third strongest. It travelled 13 kilometres with a maximum width of 500 metres. More than a hundred homes were damaged or destroyed. Large brick apartment blocks lost their roofs and much of their third storeys; a concrete barn was reduced to one or two standing exterior walls; a mobile home was thrown into the air. The damage came to 14 million kroner in 1962 money.

Thirteen years later, on 10 August 1975, the town recorded 36.4 °C, which stood as the highest temperature ever measured in Denmark for over five decades until a June 2026 heat wave pushed the national record to 37.0 °C at Ødum, north of Aarhus. For a place best known for horizontal rain off the North Sea, holding the national heat record for fifty years was a decent joke at its own expense.

The Jutland Dragoon Regiment traces its history to 1679 and the reign of Christian V, and has been garrisoned at Holstebro since 1953. With more than 1,800 employees it is by a distance the town's largest workplace — the cultural capital sits on top of a military one.

Sport supplies the rest of the civic identity. Team Tvis Holstebro, founded in 2000, fielded men's and women's handball sides until the women's section split off in 2020 to become the separate club Holstebro Håndbold; the women's team won the EHF Cup in 2012-13 and 2014-15 and were runners-up in 2010-11. The men's team still plays at the 3,250-capacity Gråkjær Arena north of the centre. Holstebro had 37,487 inhabitants on 1 January 2025, which makes one statistic irresistible: in July 2012 a Danish national Scout jamboree camped just outside town and drew more than 37,000 Scouts and Guides. For a week, Holstebro effectively doubled.