The materials found in Apsheron, testifies presence of ancient settlements here. The archeological materials, found on Artem, Lake Zig, Shuvalan, Mardakan, Binaqadi, Amirjan, etc. Places, date from the III-I centuries up to B.C.
The exact date of the foundation of Baku is unknown. Some researchers relate Baku to the years of (Gangar), Alban, Baruk. The treasure of Sasani concerning to the V-VII centuries, found in Baku shows that there was a settlement here. It is called Bagavan and Baguan in the sources (firstprimary sources) of the V-Vİ centuries; “Bakuia’, “Bakux”, “Baku“ in the Arabian sources (XX century), “Baka” in the Russian sources (XV century) and "Badkuba" in the Iranian sources in period of Safavis.
Baku was one of the large cities in the Near and Middle East as far back as Middle Ages. Oil and salt took main place in the economy. According to the information given by Arabian traveler Abu Dulafin (XX century), two mineral oil springs made a profit of approximately 720 thousand drachmas a year in Baku.
The revelopment of feudal relations, trade and craft promoted the prosperity of the town. Baku is of great importance in the trade among the countries of the East and West on the crossing of international trade ways. Slavic, Khazar, Bizans, Chinese, Iraqi, Syrian, Kenyan, Venetian, Iranian, Indian trades people were coming to Baku. The oil was exported from Baku to Iran, Iraq and other countries.
The weakening of the Abbasy caliphate and strengthening of the tendency of moving away from the central authority in the countries, subordinated to caliphate, led to creation of several independent states in the latter half of the IX century. One of them was the state of Shirvanshahlar. At the end of the XX century Baku turned into one of the main cities in Shirvan. The population was engaged in craft, trade, gardening, trucking, viniculture, silkworm breeding, agriculture, petroleum production, fish-breeding, etc. They were also engaged in sowing of saffron.
Baku became well-known as a seaport since the XX century. It was the period of prosperity at the end of the XI century –beginning of the XIII century in Baku. As a result of the conquest of Shamakhi in 1191 Shirvanshah Akhsitan I temporarily transferred the capital to Baku. The Shirvanshahs gave special attention to fortifying of the town. Baku was surrounded with two-row fortification and ditch in the XII century.
The Maiden Tower was also included in the system of protection of the town. In 1232-1235 a fortified fortress was constructed inside the bay with the purpose of protection from the direction of the sea. The Shirvanshahs created a strong fleet in the Caspian Sea.
In the thirties of the XIII century Mongols attacked Baku. After long siege the town was occupied. The oil production and trade fell into decay in Baku. In the middle of the XIV century trade (mainly traffic by sea) is rising again. The economic role of Baku rose in connection with increase of the role of Gilan and Shamakhi silk in the international trade.
Since the XIV century various goods, mainly silk, carpets, etc. had been exported from Baku to the Golden Horde, Moscow princedoms, European countries and other places. The goods were also taken out to Central Asia and southern coast of the Caspian Sea. From time to time the Caspian Sea was being called “the Baku Sea” in connection with increase of economic and political role of Baku in the second half of the XIV century (it is pointed in the atlas, issued in 1375 in Catalan). The historical and architectural monuments, having been preserved until now in Baku – the Caravanserai of Bukhara (XIV), the Caravanserai of Multan (Indian) nearby the Maiden Tower (XV-XVI centuries), etc. is evidence of presence of broad trade relations with Eastern countries. The Indian merchants were also living in Baku.
The important construction work was conducted in Baku during the reign of Shirvanshah Khalilullah I (1417-62). The complex of Shirvanshahlar Palace was also erected during this period. Trade, craft were developing, economic and cultural life was strengthening. Trade relations with the Great Moscow Princedom widened and diplomatic relations were established with it in second half of XV century.
In 1501 shah Ismail conquered Baku. In 1538 the Safavi regent Tahmasib I annexed Baku, consisting of Shirvan to the state of Safavilar. The Osmanli Army occupied Baku during the Safavi-Osmanli war in 1578. In 1607 the town passed to the authority of Safavilar again. Strengthening of the central authority, ending of feudal strife and devastating wars gave a stimulus to the development of the town in the forties of the XVII century. During the Safavilar’s reign copper coins were issued in Baku. The most of population of Baku and Apsheron were engaged in the carpet weaving. In the XVI-XVII century the craftsmanship, mainly carpet weaving began to develop even greater. The weaving was also figuring prominently in Baku. Historical constructions concerning to the seventeenth-eighteenth centuries, testify the development of architecture, embossing here...
Since the XVIII century rich natural resources and also military-strategic importance attracted attention of Russia. Aspiring at conquering the south-west coast of the Caspian Sea, Peter I created special naval expedition. On the 26th of July, 1723 Peter's I troops entered Baku. But as a result of the contract concluded between Russia and Iran (1735), Baku passed to the authority of Iran again. In the middle of the VIII century the khanate of Baku was founded. The internal wars hampered the economic and cultural development of the town.
In the second half of the XVIII century the city life and trade rose a little. In the spring of 1796 by II Ekaterina's order Russian troops, commanded by the general V. A. Zubov, attacked Azerbaijan. On the 13th July Baku was occupied. After Ekaterina's II death her son Paul I recalled V. A. Zubov. In March, 1797 tsar's troops left Baku. At the beginning of the 19th century Alexander I planned the capture of Baku. The Russian - Iranian war (1804-1813) accelerated the realization of this plan. On the 12th August, 1805 the tsar's troops encircled Baku but having failed, they retreated. At the beginning of 1806 the tsar's troops, commanded by the general P. D. Sisianov, came up to Baku again. Sisianov was killed during the negotiations on surrender of the town with Huseingulu, Baku khan. On the 6th of October, 1806 Baku was annexed to Russia. There were 500 houses, 3000 people in Baku in 1807. As a consequence of the contract of Gulustan, concluded in 1813, Northern Azerbaijan, including Baku, was annexed to Russia. The annual oil recovery made 200-300 000 poods in Apsheron. In 1847 for the first time an oil well was drilled in mechanical way in the section of Bibiheybat. The foreign capital inflow began to the petroleum industry. If in 1879 there were nine drilled wells in Baku, in 1900 their quantity reached up to 1720. The oil of Baku came to the world markets. Along with petroleum industry, other industrial branches also began to develop in Baku: mechanical plants, manufacturing workshops, tobacco factories, the mills working on steam engines, and many others appeared. New buildings, banks, buildings of trading and industrial firms were being constructed. On the 8th of May, 1883 Baku - Tbilisi railway began to work. In 1899 the first horse tramway started working in Baku. In the forties of the XIX century the first steam vessels appeared in the Caspian Sea.