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Gospic is located on the Licina river in the middle of a karst field. The first organized inhabitation of the area was recorded in 1263 as Kaseg or Kasezi. The name Gospic was first mentioned in 1604, and it likely originates in the Croatian word for "Lady", Gospa or another archaic form, Gospava.

Today's town was built around two Ottoman forts (the towers of aga Senkovic and of aga Alic). The Turkish incursion was repelled by the end of the 17th century and Gospic became an administrative center of the Lika region within the Military Frontier.

The Gospic municipality was the birthplace of such great men as the physicist and engineer Nikola Tesla, and also national thinkers as Ante Starcevic.

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