The history of Hyderabad takes us way back to 1591 when it was first founded by Mohd. Quli Qutub Shah. When his fort-city base in the Golconda faced drinking water problems, Shah decided to build a new city on the banks of Musi river and that's how the city along with other neighboring areas slowly expanded its borders. The city was named Bhagyanagar in 1590 after Bhagyamati, the beloved of Sultan Muhammad Quli of the Qutub Shahi dynasty.
Once she entered the royal household and embraced Islam, she was rechristened Hydermahal and the city got its second name, Hyderabad.
All the seven rulers of the Qutub Shahi dynasty were patrons of learning and were great builders. They contributed to the growth and development of Indo-Persian and Indo-Islamic literature and culture in Hyderabad. During the Qutub Shahi reign, Golconda became one of the leading markets in the world of diamonds, pearls, steel for arms, and also printed fabric. The glory of the Golconda kingdom ended in 1687, after a valiant struggle. Aurangzeb, the last great Mughal ruler, captured Golconda after a siege that lasted eight months. Subsequent rulers of Hyderabad were viceroys, installed by the Mughal administration in Delhi. In 1724 the Hyderabad Viceroy, Asif Jah, took advantage of waning Mughal power and declared Hyderabad an independent state with himself as the leader.
That was the beginning of the Nizam dynasty and Hyderabad became a focus for arts, culture, learning and the centre of Islamic India. Its abundance of rare gems and minerals - the famed Jacob diamond is part of the Nizam's collection - furnished the Nizams with enormous wealth. The seven Nizams of the Asif Jah dynasty ruled the Deccan for nearly 224 years, right up to 1948. The rule of the Nizams saw the growth of Hyderabad both culturally and economically.
Huge reservoirs, like the Nizam Sagar, Tungabadra, Osman Sagar, Himayath Sagar, and others were built. Survey work on Nagarjuna Sagar had also begun during this time. Hyderabad, under the Nizams, was the largest princely state in India. The State had its own currency, mint, railways, and postal system. There was no income tax. The Nizam was the richest man in the world with a fortune of over 14 million dollars in 1937! Persian was the official language up to 1893 and then Urdu up to 1948. When the British and the French spread their hold over the country, the Nizam soon won their friendship without bequeathing his power. The title "Faithful Ally of the British Government" was bestowed on Nizam VII.
Hyderabad was united with Secunderabad - a British cantonment and till date, has a large army presence. Secunderabad, endearingly known as ‘the twin city', was named after Sikander Jah, the third Nizam of Asif Jahi dynasty. The British stationed a Resident at Hyderabad, but the state continued to be ruled by the Nizam. Soon after India gained independence, Hyderabad State merged with the Union of India. On November 1, 1956 the map of India was redrawn into linguistic states, and Hyderabad became the capital of Andhra Pradesh.