Gaindakot is believed to have once been the home of rhinos (Gainda), and the name "Gaindakot" derives from the presence of these animals in the area, with "Kot" referring to high land. During the Panchayat era, it was known as Gaindakot Gaau Panchayat. However, following the introduction of the multiparty system in 1990, the name changed to Gaindakot Gaau Bikash Samiti. Later, in May 2014, it was upgraded to Gaindakot Nagar Palika (Gaindakot Municipality) after incorporating Mukundapur Gaau Palika and Amarapuri Gaau Palika. Gaindakot was previously governed under the Jamindari system (land revenue system), which was abolished with the introduction of land reforms (Bhumi Sudhaar) during the Panchayat period. These reforms placed restrictions on excessive land holdings, except for those intended for industrial or commercial purposes.

The population of Gaindakot remained sparse until the Malaria eradication campaign was launched during the Panchayat era. After the successful eradication of malaria, the population began to grow rapidly. Initially, the area was mainly populated by migrants from Tanahu, Lamjung, and Baglung. In recent years, people from other regions of Nepal and even from India have also settled in Gaindakot.

Gaindakot’s soil is highly fertile, making it ideal for agriculture. Mustard (Tori), along with paddy and maize, is among the primary crops grown in the area. However, the region has been significantly impacted by land plotting and the government's failure to effectively regulate housing development, leading to some environmental and infrastructural challenges.