Since the retreat of the glaciers at the end of the Ice Age, archaeology has shown continuous occupation of the site of Bad Tölz. For example, there are finds from the Hallstatt culture, as well as from Roman Raetia, or at least occupation by romanized Celts.
The name "Tölz" (as "Tolnze") appears relatively late in documentation at the end of the 12th century. The name "Reginried" appears as that of a settlement belonging to the monastery at Tegernsee in earlier texts, which is probably the same as Reid in the western part of Mühlfeld.
Hainricus de Tolnze built a castle on the site, which controlled the river and road traffic in the region, but which no longer exists. In 1331 Louis IV made Tölz a market town.
The 14th century saw Tölz become a crossroads for the salt and lumber traffic on the Isar. In 1453 the market street, church, and castle were destroyed by fire. Duke Albrecht III enabled the city to rebuild, but this time in stone. He also built a palace which stood until 1770 when it fell into disrepair, and was eventually undermined by the Ellbach.
The Thirty Years' War (1618 – 1648) brought plague and destruction to the region. During the War of the Spanish Succession things began to turn around again, with trade in lime and wood products, among other items. During this war, in 1705, the vintner Johann Jäger of Tölz led a band of farmers to battle at Sendling (south of Munich).
In the middle of the 19th century, Tölz changed directions with the discovery of natural springs. The town began to focus on the healing properties of these spring, and became a cure and spa town. In 1899 it became known as Bad Tölz. The town is also known as a pilgrimage site; on November 6 there is a festival to Saint Leonard of Noblac. In 1718 a chapel was built in his honor on the Calvary hill.
In 1937 SS-Junkerschule Bad Tölz was established near the town. The SS-Junkerschule (SS Officer Candidate School) operated until the end of World