Olivine, which is actually not an official mineral, is composed of two minerals: fayalite and forsterite. Fayalite is the iron rich member and forsterite is the magnesium rich member. Olivine's formula is written as (Mg, Fe)₂SiO₄ to show the substitution of the magnesium and iron. Peridot is usually closer to forsterite than fayalite in composition although iron is the coloring agent for peridot. The best colored peridot has an iron percentage of less than 15% and includes nickel and chromium as trace elements that may also contribute to the best peridot color.

Peridot is perhaps derived from the French word peritot which means unclear, probably due to the inclusions and cloudy nature of large stones. It could also be named from the Arabic word faridat which means gem. In either case, peridot has been mined as a gemstone for an estimated four thousand years or better, and is mentioned in the Bible under the Hebrew name of pitdah (see Biblestones). Peridot gems along with other gems were probably used in the fabled Breastplates of the Jewish High Priest, artifacts that have never been found. The Greeks and Romans referred to peridot as topazion and topazius respectively and this name was later given to topaz, to end the confusion with the two gems. Historical legend has it that peridot was the favorite gemstone of Cleopatra. Pliny wrote about the green stone from Zagbargad Island in 1500 B.C.. Even until recently jewelers have used the term "chrysolite" (latin for golden stone) in referring to peridot gems for some reason. This term has also been used to refer to other gemstones, of a more golden color.

Zagbargad (Zebirget) Island has been known as St John's Island and was mined for centuries. Before World War I, this island was extensively mined and produced millions of dollars worth of gems. Since then the mining has been off and on and at present is all but nonexistent. Still, specimens from here are available at times and it certainly is a classic mineral locality.

Throughout time, peridot has been confused with many other gemstones, even emerald. Many "emeralds" of royal treasures have turned out to be peridots! And although peridot is distinctly a different shade of green, many jewelers refer to peridot as "evening emerald". Emerald is a dark green as opposed to a yellow green and always contains inclusions. Other green gemstones confused with peridot include apatite (which is much softer); green garnets (have no double refraction), green tourmaline and green sinhalite (both of which are strongly pleochroic), moldavites (no double refraction) and green zircon (significantly heavier). All of these gemstones rarely have as nice a yellow component to their green color as does most peridot, but darker green peridot can be confusing when good crystal form is not discernible.

Peridot is a beautiful gemstone in its own right and is widely popular. Its popularity is said to be increasing yearly and with new finds in Pakistan producing exceptionally well crystallized specimens, peridot can be fun to collect for years to come.

Olivine has the same overall composition as the Earth's mantle, and thus can be considered to be the most common mineral INSIDE the Earth (the 1600 mile wide solid iron core is second). In a sense then, peridot may be by far the most common gemstone. Some volcanoes, including Hawaii, occasionally produce sands which are composed of transparent green grains of peridot. On the Big Island, the sands mostly appear black except on a beach near the southernmost tip of the island.