Prairie City HistoryPrairie City is at the upper end of the John Day River valley in eastern Oregon. It is about 50 miles southwest of Baker City by highway and 13 miles east of John Day along U.S. Route 26 in Grant County. Strawberry Mountain in the Strawberry Mountain Wilderness of the Malheur National Forest is directly south of the city.

Prairie City grew out of the former mining camp of Dixie, established in 1862 about 3 miles up Dixie Creek from the John Day River. Prairie City, at the mouth of the creek, was chosen after placer mining rendered Dixie unsuitable for a townsite. The new city's post office was established in 1870 with Jules Le Bret as postmaster.

A narrow gauge line, the Sumpter Valley Railway (SVR), ran 80 miles from Baker City west to Sumpter and on to its western terminus at Prairie City, which it reached in 1907. It carried passengers as well as freight shipped by ranchers, mining interests, and timber companies until its piecemeal abandonment in the 1930s. In the 21st century, a heritage railway operates on a segment of the original line between Sumpter and McEwen.

The economy is primarily vested in ranching, retail stores and public services. Tourism is driven by Prairie City's unique geographic location as a principal access point to the Strawberry Mountain National Wilderness.