About 600,000 years ago, huge volcanic eruptions occurred in Yellowstone, emptying a large underground magma chamber. Volcanic debris spread for thousands of square miles in a matter of minutes. The roof of this chamber collapsed, forming a giant smoldering pit. This caldera was 30 miles (45 km) across, 45 miles (75 km) long, and several thousand feet deep. Eventually the caldera was filled with lava.

One of these lava flows was the Canyon Rhyolite flow, approximately 590,000 years ago which came from the east and ended just west of the present canyon. A thermal basin developed in this lava flow, altering and weakening the rhyolite lava by action of the hot steam and gases. Steam rises from vents in the canyon today and the multi-hued rocks of the canyon walls are also evidence of hydrothermally altered rhyolite.

Other lava flows blocked rivers and streams forming lakes that overflowed and cut through the various hard and soft rhyolites, creating the canyon. Later the canyon was blocked three different times by glaciers. Each time these glaciers formed lakes, which filled with sand and gravel. Floods from the melting glaciers at the end of each glacial period recarved the canyon, deepened it, and removed most of the sand and gravel.

The present appearance of the canyon dates from about 10,000 years ago when the last glaciers melted. Since that time, erosional forces (water, wind, earthquakes, and other natural forces) have continued to sculpt the canyon.

When the Cook-Folsom expedition stepped out of the woods on the south rim of the canyon in 1869 the staggering view prompted Folsom to use the following adjectives in his description of it: "pretty, beautiful, picturesque, magnificent, grand, sublime, awful, terrible". It is thought to be that description which prompted the naming of Point Sublime in the early 1920s.

Uncle Tom's Trail was first constructed in 1898 by "Uncle" Tom Richardson. The five years following its construction, Uncle Tom led visitors on tours which included crossing the river upstream from the present day Chittenden Bridge, and then following his rough trail to the base of the Lower Falls. The tour was concluded with a picnic and a return trip across the river.

Today Uncle Tom's Trail is very different from the simple trail used by Mr. Richardson and his visitors. It is still, however, a very strenuous walk into the canyon. The trail drops 500 feet (150 m) in a series of more than 300 stairs and paved inclines.

Inspiration Point is a natural observation point. It is at a location where the canyon wall juts far out into the canyon allowing spectacular views both upstream and down.