In 1463 Quli Qutb-ul-Mulk established the fortress of Golconda about 8 km to the west of Hyderabad’s present day old city. He had quelled rebellion in the Telangana region and was appointed the subedar, or administrator of the region as a result. By 1518, he had become independent from the Bahmani sultan, declared himself the Sultan under the name of Quli Qutb Shah and established the Qutb Shahi dynasty. In 1589, Muhammad Quli Qutb Shah, a grandson of Quli Qutb Shah, made the decision to move his capital from the Golconda fort to the present day location of Hyderabad due to water shortages at the old location. In 1591, he ordered the construction of the Charminar, reportedly in gratitude to Allah for cutting short a plague epidemic before it could do too much damage.

The name "Hyderabad" reportedly had its origins in an affair between Mohammad Quli Qutb Shah and a local Telugu courtesan named Bhagmati. He named the city Bhagyanagar after her, and after she converted to Islam and took on the name of "Hyder Mahal", he named the city Hyderabad. Hyderabad was built on a grid plan with help from Iranian architects. French traveler Jean-Baptiste Tavernier favorably compared Hyderabad to Orleans.

The Qutb Shahi dynasty lasted till 1687, when the Mughal emperor Aurangzeb defeated the sultanate and took over Hyderabad. He appointed his governor as ruler of the region and granted him the title of Nizam-ul-Mulk. However, Mughal rule was short-lived and in 1724, the Nizam Asaf Jah I gained independence from a declining Mughal empire. Legend has it that while on a hunting expedition, he met a holy man who offered him some kulchas and asked him to eat as much as he could. Asaf Jah ate only seven, and the holy man prophesied that his dynasty would last for seven generations. Sure enough, the seventh ruler in the dynasty was the last. In honour of the legend, the flag of the Nizams featured a kulcha.

Around 1763, Asif Jah II, defeated by the Marathas and threatened by Tipu Sultan of Mysore, entered into a subsidiary alliance with a British. Hyderabad state became a "princely state", protected by, and under the overlordship of the British. The British maintained their army in nearby Secunderabad to protect the Nizam and to ensure that he did not do any mischief. Hyderabad state was the richest in the country and in the 1930s Time magazine rated the Nizam the richest man in the world. In 1947, with India's independence, the seventh Nizam was reluctant to cede his principality to the newly independent India, preferring Pakistan instead. India sent in its troops and the 200 year old prophesy was fulfilled. On September 17th 1948, it was merged in to India. 

Hyderabad become the capital city of Hyderabad state till November 1st 1956. After forced merger of hyderabad state with Andhra state and formed new linguistic state Andhra Pradesh on Nov 1st 1956. Thus, Hyderabad became the capital of the newly formed state of Andhra Pradesh. The new capital's administrative buildings were located around Hussain Sagar Lake, approximately between Secunderabad and the "old city", as the Nizam's city came to be called.

In 1995, Chandrababu Naidu became chief minister of Andhra Pradesh. Among his key policies was a major initiative to turn the city into an IT hub. He cleaned up the streets, laid out IT parks and did much to attract technology companies into the city. Today, as Bangalore’s infrastructure is choked by the city’s rapid growth, Hyderabad's well-laid out streets are proving to be a major attraction for software and IT-enabled companies. The technology enclave of Madhapur has actually been officially named Hi tec city, and "Cyberabad" is commonly used as an alternative name to Hyderabad.

In 2007, the suburbs of Hyderabad were merged with the city to form Greater Hyderabad. In 2009, the longstanding demand to have Telangana created as a separate state came to boil, with low intensity agitations and disturbances shaking up Hyderabad. While the traveller need not worry much it does call into question Hyderabad's future status, as Telangana includes Hyderabad city.