The town was founded in 1494 by Ahmad Nizam Shah on the site of a ancient city, Bhingar. With the breakup of the Bahmani Sultanate, Ahmad established a new sultanate in Ahmednagar, known as the Nizam Shahi dynasty. It was one of the Deccan sultanates, which lasted until its conquest by Mughal emperor Shah Jahan in 1636. Aurangzeb, the last great Mughal emperor, who spent the latter years of his reign, 1681-1707, in the Deccan, died there in 1707, and a small monument marks the site.
In 1759 the Peshwa of the Marathas obtained possession of the place by bribing the Muslim commander, and in 1790 it was ceded by the Peshwa to the Maratha chief Daulat Rao Sindhia.
Ahmednagar was invaded by a British force under General Wellesley and captured. It was afterwards restored to the Marathas, but again came into the possession of the British in 1817, according to the terms of the Treaty of Poona.
Numerous Mughal-era buildings dot the environs. Ahmednagar Fort, once considered the second most unimpregnable fort in India, was used by the British to house Jawaharlal Nehru (first prime minister of India) and other Indian Nationalists before Indian independence. A few rooms there have been converted to a museum. During his confinement by the British at Ahmednagar Fort Nehru wrote the famous book The Discovery of India.
Ahmednagar is home to the Indian Armoured Corps Centre & School (ACC&S), the Mechanised Infantry Regimental Centre (MIRC), the Vehicle Research and Development Establishment (VRDE) and the Controllerate of Quality Assurance Vehicles (CQAV). Training and recruitment for the Indian Armoured Corps takes place at the ACC&S.
Formerly the Indian base of the British Army's Royal Tank Corps, amongst other units, the town houses the second-largest display of military tanks in the world. The exhibit is open to the public.