Fur trapping was Idaho's earliest industry. Agriculture and mining began around 1860, with agriculture dominating since the 1870s. Timber became important after 1900, tourism and manufacturing—especially food processing and forest products—after 1945. Currently, agriculture, mining, forest products, and food processing are Idaho's largest industries.

The Idaho economy prospered in the 1970s. Machinery and transportation equipment manufacturing grew 20% between 1970 and 1980, and services expanded 7.5%. The early 1980s, in contrast, brought a national recession in which Idaho lost 8% of its employment base. Recovery required a restructuring of Idaho's mining, forest products, and agricultural industries that resulted in the laying off of large numbers of employees. Other industries posted significant gains in employment in the 1980s. Chemical manufacturing employment grew 36% in the early and mid-1980s, and jobs in the paper industry increased 30%. Travel and tourism employment rose 35% between 1982 and 1991, and high-tech jobs increased 50% between 1986 and 1990. Disputes with the federal government over the management of federal lands remained central to discussion of Idaho's economic policy, as the federal government owns 60% of Idaho's public land. The disputes center on such matters as grazing fees, costs of water from government projects, species protection, and mining regulations. The electronics industry continued to grow during the 1990s, as evidenced by expansions announced by Hewlett Packard, Micron, and Zilog. Construction employment also increased. Other manufacturing sectors were also increasing, so that from 1997 to 2000, there was an overall 37% increase in Idaho's manufacturing output, and an increase in its relative share of total state output from 20.2% to 22.1%. More than half of the gain was lost, however, in the national recession in 2001, as manufacturing output fell 19.4% in one year, reducing the net gain since 1997 to 10.3%, and manufacturing's share in the state economy to a new low of 17.8%. The recession and continued slowdown severely impacted Idaho's economy, as strong annual growth rates at the end of the 20th century—5.6% in 1998, 11.4% in 1999 and 6.3% in 2000—abruptly fell to 0.4% in 2001. The highest rate of job loss was in the construction sector, where employment fell 11% from December 2001 to December 2002. Over the same period, employment in manufacturing fell 4% and about 4,500 high-paid high-tech sector jobs were lost. Idaho's economy was also afflicted in 2002 by drought conditions that reduced grazing land and threatened the state's potato crop. Idaho farmers were also hurt by historically low milk prices that in 2002, that continued into 2003.

Idaho's gross state product in 2001 was 44th largest among the states at $36.9 billion, to which general services contributed $6.6 billion; manufacturing,$6.57 billion; trade, $6.2 billion; government, $5.2 billion, financial services, $4.5 billion, transportation and public utilities, $2.9 billion, and construction, $2.6 billion. The public sector constituted 14.1% of gross state product.