Olivine, of which peridot is a type, is a common mineral in mafic and ultramafic rocks, often found in lava and in peridotite xenoliths of the mantle, which lava carries to the surface; however, gem-quality peridot occurs in only a fraction of these settings. Peridots can also be found in meteorites.
Peridots can be differentiated by size and composition. A peridot formed as a result of volcanic activity tends to contain higher concentrations of lithium, nickel and zinc than those found in meteorites.
Olivine is an abundant mineral, but gem-quality peridot is rather rare due to its chemical instability on Earth's surface. Olivine is usually found as small grains and tends to exist in a heavily weathered state, unsuitable for decorative use. Large crystals of forsterite, the variety most often used to cut peridot gems, are rare; as a result peridot is considered to be precious.
In the ancient world, mining of peridot, called topazios then, on St. John's Island in the Red Sea began about 300 B.C.
The principal source of peridot olivine today is the San Carlos Apache Indian Reservation in Arizona. It is also mined at another location in Arizona, and in Arkansas, Hawaii, Nevada, and New Mexico at Kilbourne Hole, in the US; and in Australia, Brazil, China, Egypt, Kenya, Mexico, Myanmar (Burma), Norway, Pakistan, Saudi Arabia, South Africa, Sri Lanka, and Tanzania.