The human settlements in Gujranwala existed since antiquity. The first name of the settlement according to the compilers of the first edition of the district gazette was Khanpur Shansi after an individual of the Jat tribe called Khan Shansi who founded 11 villages in the nearby area. Gujjar also settled in the Gujranwala region. They reach such dominance that the town came to be known as Gujranwala. It seems likely that the district once contained the capital of the Punjab, at an epoch when Lahore had not begun to exist.

We learn from the Chinese Buddhist pilgrim, Hsuan Tsang, that about the year 630 A.D. he visited a town known as Tse-kia (or Taki), the metropolis of the whole country of the five rivers. A mound near the modern village of Asarur has been identified as the site of the ancient capital. Until the Muslim rule little is known of Gujranwala, except that Taki had fallen into oblivion and Lahore had become the chief city. ‘Under Muslim rule the district flourished for a time; but a mysterious depopulation fell upon the tract, and the whole region seems to have been almost entirely abandoned. The Compilers of the district Gazetteer Gujranwala date this name to Approximately 300 years, giving us a rough estimate of the middle of the 16th century. Other smaller town in the vicinity for example Sohdara Eminabad Wazirabad and Ghakhar have older antecedent than Gujranwala itself.

The Sikhs occupied the Punjab after the death of the Mughal Emperor Aurangzeb Alamgir in 1707. Maharaja Ranjit Singh was the most powerful of all the Sikh rulers and ruled over for 40 years. After his death in 1840 the Sikh Empire was divided and disintegrated. The area was conquered and annexed by the British in 1849. A railway line was built along Grand Trunk Road in 1881. That railway line interconnected Gujranwala with other cities of Punjab and made the commercial trade between cities more convenient. British ruled the city until Pakistan's independence in 1947.

After independence Gujranwala was developed and it is now leading city of Pakistan. It is now an agricultural marketing center (grains, melons, sugarcane); it is also a commercial and industrial center, manufacturing ceramics, iron safes, copper, brass, and aluminum utensils. The establishment of an industrial park, textile, silk, pipefitting, electric fan, and tannery production increased its importance. Cultivation in the surrounding area is dependent upon canal irrigation. Wheat, cotton, rice, barley, and millet are the chief crops. One of the best quality Rice grows in Gujranwala.

In 1951, the city was converted into the capital of the district, which gave rise to the new industries in the city. The Gujranwala hydroelectric project provides power from the Chenab River. There are also rice and sugar mills and glassworks in the locality. City has an International Level Cricket Stadium, Jinnah Stadium also or formerly known as Municipal Stadium.