In a document dated 5 July 1166, in which Archbishop Conrad II of Salzburg confirms the donation of a chapel in the area to nearby Millstatt Abbey, there is mention of "Chirchem" as well as of a priest called Pabo. This is considered the first mention of Bad Kleinkirchheim. The settlement is also mentioned in a 1777 deed issued by Pope Alexander III. The Benedictine monks had the forests cleared and the valley colonized by smallholder peasants. The settlement was later called Kleinkirchheim in order to distinguish it from Großkirchheim in the Carinthian Möll Valley.