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The previously heavily forested upper Ore Mountains were settled in the 12th and 13th centuries by Franconian farmers. Frohnau, Geyersdorf, and Kleinrückerswalde—all now part of present-day town—are all attested from 1397.
Barbara Uthmann introduced braid- and lace-making in 1561 and it was further developed in the 1590s by Belgian refugees fleeing the policies of the Duke of Alba, Spain's governor over the Low Countries. The industry was further developed in the 19th century, when Annaberg and Buchholz were connected by rail to Chemnitz and each other and both settlements had specialized schools for lace-making. The population of Annaberg in the 1870s was 11,693. This had risen to 16,811 by 1905, with another 9307 in Buchholz.
The area is a tourist destination and ski resort. The Ore Mountains are referred to as Land of Christmas and famous for the Christmas Markets and the carved sculptures. Annaberg has a Roman Catholic church and three Protestant churches, among them St. Anne's (built 1499-1525), which is the largest of its kind in Saxony. There are public monuments to Luther, the famous mathematician Adam Ries, and Barbara Uthmann. Buchholz had another Gothic Protestant church and monuments to Frederick the Wise and Bismarck. Annaberg is well known for its historical old town and market square; the house Markt 2 shows the coat of arms of the family Apian-Bennewitz.
The Frohnauer Hammer is a historic and fully working preserved hammer mill in the village of Frohnau within the municipality. In 1907, it was declared a technical monument and, since then, has been open to the public. In addition to the actual hammer mill itself, there is an exhibition of forged items and the former master hammersmith's house (Hammerherrenhaus).