In 2008, during the construction works of the Yenikapı subway station and the Marmaray tunnel at the historic peninsula on the European side, a previously unknown Neolithic settlement dating from circa 6500 BC has been discovered. The first human settlement on the Anatolian side, the Fikirtepe mound, is from the Copper Age period, with artifacts dating from 5500–3500 BC. In nearby Kadıköy (Chalcedon) a port settlement dating back to the Phoenicians has been discovered. Cape Moda in Chalcedon was the first location which the Greek settlers from Megara chose to colonize in 685 BC, prior to colonizing Byzantion on the European side of the Bosphorus under the command of King Byzas in 667 BC. Byzantion was established on the site of an ancient port settlement named Lygos, founded by Thracian tribes between the 13th and 11th centuries BC, along with the neighbouring Semistraof which Plinius had mentioned in his historical accounts. Only a few walls and substructures belonging to Lygos have survived to date, near the Seraglio Point (Turkish: Sarayburnu), where the famous Topkapı Palace now stands. During the period of Byzantion, the Acropolis used to stand where the Topkapı Palace stands today.

After siding with Pescennius Niger against the victorious Roman emperor Septimius Severus, the city was besieged by the Romans and suffered extensive damage in 196 AD. Byzantium was rebuilt by Severus and quickly regained its previous prosperity, being temporarily renamed as Augusta Antonina by the emperor, in honour of his son.

The location of Byzantium attracted Constantine I in 324 after a prophetic dream was said to have identified the location of the city; but the true reason behind this prophecy was probably Constantine's final victory over Licinius at the Battle of Chrysopolis (Üsküdar) on the Bosphorus, on 18 September, 324, which ended the civil war between the Roman Co-Emperors, and brought an end to the final vestiges of the Tetrarchy system, during which Nicomedia (present-day İzmit, 100 km (62 mi) east of Istanbul) was the most senior Roman capital city.[16] Byzantium (now renamed as Nova Roma which eventually became Constantinopolis, i.e. "The City of Constantine") was officially proclaimed the new capital of the Roman Empire six years later, in 330. Following the death of Theodosius I in 395 and the permanent partition of the Roman Empire between his two sons, Constantinople became the capital of the Eastern Roman (Byzantine) Empire. As well as being the centre of an imperial dynasty, the unique position of Constantinople at the centre of two continents made the city a magnet for international commerce, culture and diplomacy. The Byzantine Empire was distinctly Greek in culture and became the centre of Greek Orthodox Christianity, while its capital was adorned with many magnificent churches, including the Hagia Sophia, once the world's largest cathedral. The seat of the Patriarch of Constantinople, spiritual leader of the Eastern Orthodox Church, still remains in the Fener (Greek: Phanar) district of Istanbul.

In 1204, the Fourth Crusade was launched to capture Jerusalem, but had instead turned on Constantinople, which was sacked and desecrated. The city subsequently became the centre of the Catholic Latin Empire, created by the crusaders to replace the Orthodox Byzantine Empire, which was divided into a number of splinter states, of which the Empire of Nicaea was to recapture Constantinople in 1261 under the command of Michael VIII Palaeologus.

In the last decades of the Byzantine Empire, the city had decayed as the Byzantine state became increasingly isolated and financially bankrupt, its population had dwindled to some thirty or forty thousand people whilst large sections remained uninhabited. Due to the ever increasing inward turn the Byzantines took, many facets of their surrounding empire were now falling apart, leaving them vulnerable to attack. Ottoman Turks began a strategy by which they took selected towns and smaller cities over time, enveloping Bursa in 1326, Nicomedia in 1337, Gallipoli in 1354, and finally Adrianople in 1362. This essentially cut off Constantinople from its main supply routes, strangling it slowly.

On 29 May 1453, Sultan Mehmed II "the Conqueror" captured Constantinople after a 53-day siege (during which the last Roman/Byzantine emperor, Constantine XI, died near the Porta Aurea while defending the city) and proclaimed that Constantinople was now the new capital of the Ottoman Empire. Sultan Mehmed's first duty was to rejuvenate the city economically, creating the Grand Bazaar and inviting the fleeing Orthodox and Catholic inhabitants to return. Captured prisoners were freed to settle in the city whilst provincial governors in Rumelia and Anatolia were ordered to send four thousand families to settle in the city, whether Muslim, Christian or Jew, to form a unique cosmopolitan society. The Sultan also endowed the city with various architectural monuments, including the Topkapı Palace and the Eyüp Sultan Mosque. Religious foundations were established to fund the construction of grand imperial mosques (such as the Fatih Mosque which was built on the spot where the Church of the Holy Apostles once stood), adjoined by their associated schools, hospitals and public baths. Suleiman the Magnificent's reign of the Ottoman Empire from 1520 to 1566 was a period of great artistic and architectural achievements. The famous architect Sinan designed many mosques and other grand buildings in the city, while Ottoman arts of ceramics, calligraphy and miniature also flourished.

When the Republic of Turkey was founded in 1923 by Mustafa Kemal Atatürk, the capital was moved from Istanbul to Ankara. In the early years of the republic, Istanbul was overlooked in favour of the new capital. However, starting from the late 1940s and early 1950s, Istanbul underwent great structural change, as new public squares (such as Taksim Square), boulevards and avenues were constructed throughout the city; sometimes at the expense of the demolition of many historical buildings. Starting from the 1970s, the population of Istanbul began to rapidly increase, as people from Anatolia migrated to the city in order to find employment in the many new factories that were constructed at the outskirts of the sprawling metropolis. This sudden sharp rise in the city's population caused a large demand for housing development, and many previously outlying villages and forests became engulfed into the greater metropolitan area of Istanbul. Illegal construction, combined with corner-cutting methods, have accounted for the reason why 65% of the buildings in Istanbul are built without proper planning. The concerns have increased due to the serious nature of the Izmit earthquake of August 17, 1999.