Krynica was still of interest to the Galician authorities which provided funds for it’s further development. In the years 1907-1908 telephones and electric power supply were provided for the town. In 1911, the local rail line from Muszyna to Krynica was opened. This greatly increased the number of visitors, which reached 11,150 in that year.
In the years 1912-1914 news drill were carried out under prof. Jan Zuber supervision. The new highly mineralized spring that was found had excellent curative properties. The spring was named “Zuber” after its discoverer.
Until 1904 Krynica was a rural municipality. Local population were mostly Lemkos, with a Polish and Jewish migrants minority. There were often conflicts of interest between these nations, in particular the Poles and the Lemkos. Finally, both ethnic groups agreed on separating the spa resort from the village. On July 21th 1911 the boundaries of the town were established. and the town was named Krynica Zdroj in order to discern it from Krynica Village, now a separate unit. In the same year, the Spa Management Committee was dissolved and administration of the spa resort was given over to the new Krynica Zdroj Community Council. Before the division, 606 Poles, 1,661 Lemkos and 445 Jews lived in Krynica. After the division, Krynica Zdroj was inhabited mainly by Poles and Jews, while the Lemkos remained in the village.
The outbreak of World War I had badly affected the spa resort, which became empty of visitors. Although there was no direct fighting in the town (only some minor armed clashes at Slotwiny village), the town was affected by fires set up by hostile troops. Despite relatively smalldamage the spa town much deteriorated.