The southern half of the ancient province of Carmania (modern Kerman) was considered by the Greek geographers to be fertile and prosperous. It contained gold and silver mines, a river and a major trade root going through its territory. The area was well populated by the time the first Persian Empire was formed. Though it was not assigned a province by the Achaemenid administrators, Carmania was part of the Persia proper with small towns and a military garrison. It later became a province under the Seleucids and the Parthians.

In the Sasanian period from third to seventh centuries AD, the area was bordering the famous Silk Road, and the old city of Bam, where the citadel is located was expanded. The Sasanian foundations still existed before the recent earthquake. After the Islamic conquest, Bam was conquered, but the area remained a Persian stronghold. By the tenth century AD, the old city of Bam became a flourishing town and once again on a major trade root connecting the east to the Persian Gulf. It was captured by the Seljuk Turks in the 11th century and witnessed minor sieges over the centuries and was repaired many times. It was expanded and developed during the Safavid rule in 16th century, and what was justify of the old city before the earthquake was mostly from the this period.

The citadel was captured and devastated by the Ghalzai Afghans in 1722 and was recaptured in 1729 by Nader Shah Afshar. Its most famous moment happened in 1795, when the popular Zand Prince, Lutf Ali Khan sought refuge in the town, but was betrayed by the local governor who eventually handed him over to the merciless Agha Mohammad Khan Qajar. Lutf Ali became a folk hero with poetry and folk songs in his memory.

Some forty-five years later, the Agha Khan Mahallati, the head of the Isma'ili Sect, revolted against Fath Ali Shah. Defeated at Kerman, he and his followers took refuge in Bam, were given safe passage, and they subsequently fled to India.

The old city was inhabited till the middle of the 19th century, local feuds and the loss of the trade roots eventually forced the inhabitants to abandon the old city and the modern city of Bam soon started growing adjacent to the old city. The old Bam has been built on a huge rock mass at the northeast of the living town, and is a city with extensive use of red clay and brick and underground water system. Locally, it is called "Arge Bam" meaning Bam citadel, 300 m long and 200 m wide, it has two parts. It is similar to a large medieval European castle. It is surrounded by a more than three-kilometer long wall supported by dozens of towers for defense purposes. The citadel itself, comprising of four sections and 28 watchtowers, occupies an area of 200,000 sq m and all together has 67 towers. It was a very well preserved medieval city in Iran and one of the largest in the world and was designated a world heritage site by UNESCO. It contained separate living quarters for Muslims and non-Muslims, bazaar, mosque and the military quarters and the governor's' residence, and a Caravansary or the local inn for the travelers with all the expected amenities.

During the last decade it became nationally well known when a determined woman moved into the citadel, set up a coffee shop and aimed at raising funds to restore the old city. Her efforts were successful and the fort was under restoration before the recent earthquake.

The loss of life and the magnificent historical site has prompted the Iranian community in North America to gather funds for relief agencies working in the area.