Originally, rhinestones were rock crystals gathered from the river Rhine, hence the name, although some were also found in areas like the Alps, today the name "rhinestone" applies only to varieties of lead glass known as crystal glass. The availability was greatly increased in the 18th century when the Alsatian jeweler Georg Friedrich Strass had the idea to imitate diamonds by coating the lower side of lead glass with metal powder. Hence, rhinestones are called strass in many European languages.

As opposed to the classic rhinestones, which had a metal powder coating on the bottom side only, several companies have opted to mass-produce iridescent lead glass, by reducing the metal coating thickness and applying it uniformly, not using metal powder with a binder but by applying various forms of metal deposition (thin foil, vapor deposition, etc): Favrile glass by Tiffany in 1894, Carnival glass under the name "Iridrill" by Fenton in 1908, "Aurora Borealis" glass by Swarovski in 1956 and PVD-coated dichroic glass in the late 20th century, amongst many other decorative lead glasses coated with a thin metal layer sold under various commercial names such as "rainbow glass", "aurora glass" and such.

Rhinestones can be used as imitations of diamonds, and some manufacturers even manage to partially reproduce the glistening effect real diamonds have in the sun.