In later times, it most often occurs under the name Mühlenbach. The Hungarian form Malompatak and the name used for the 1st Czechoslovak Republic Milbach were derived from this German name. Since 1948, after the eviction of the German population, only the Slovak form - Mlynica - has been used. The etymology of the name of the village suggests that it is derived from the stream on which the mill or more mills once stood.
From 1412, the town belonged to the Union of 11 Spiš towns that remained in Hungary, after the backup of 13 Spiš towns from the Union of 24 Spiš towns to the Polish king Žigrnund of Luxembourg. Due to the fact that Mlynica, together with the other 10 Spiš towns, became the property of the Zápoľský family around 1465 - the owners of Spiš Castle and hereditary Spiš counties, their development was not favorable. Gradual pruning of the privileges of 11 Spiš towns by landowners Zápoľskovce, later Turzovcarni (1531 - 1636) and Čákyovcarni (1638 - 1848) resulted in the descent of these towns to the level of other serf villages belonging to the domain of Spiš Castle. The landowners treated the towns as private property, they could sell them or back them up. This happened, for example, to Mlynice at the beginning of the 17th century, when the Turz family. for a time they backed up to Marek Horvát from Strážky and in the 1930s to Štefan Tököly from Kežmarok. The designation of Mlynice as a town (oppidum) in documents from the 16th to the 19th century was only formal.