The word Tehran" comes from the Persian words "Tah" meaning "end or bottom" and "Ran" meaning "[mountain] slope"—literally, bottom of the mountain slope. Given Tehran's geographic position at the bottom of the slope of the Alborz Mountains, this appears to be the most plausible explanation of the origin of the name of the city.

Excavations place the existence of settlements in Tehran as far back as 6000 BC. Tehran was well known as a village in the 9th century, but was less well-known than the city of Rhages which was flourishing nearby in the pre-Mongol era. In the 13th century, following the destruction of Ray by Mongols, many of its inhabitants fled to Tehran. In some sources of the Mongol era the city is mentioned as "Rhages's Tehran". The city is later mentioned in Hamdollah Mostowfi's Nuz'hat al-Qulub (written in 1340) as a famous village.

Don Ruy Gonzáles de Clavijo, a Castilian ambassador, was probably the first European to visit Tehran, stopping in July 1404, while on a journey to Samarkand (now in Uzbekistan) and the Mongol capital at the time. At this time, the city of Tehran was unwalled.

Tehran became a residence of the Safavid rulers in the 17th century. Tahmasp I built a bazaar and a wall around the city, but it somewhat fell out of favour after Abbas I turned sick when he was passing the city to go to a war with the Uzbeks.

In the early 18th century, Karim Khan Zand ordered a palace, a harem, and a government office to be built in Tehran, possibly to declare the city his capital, but later moved his government to Shiraz. Tehran finally became the capital of Persia in 1795, when the Qajar king Agha Mohammad Khan was crowned in the city. It remains the capital to this day.

During World War II, British and Soviet troops entered the city. Tehran was the site of the Teheran Conference in 1943, attended by U.S. President Franklin D. Roosevelt, British Prime Minister Winston Churchill, and Soviet Premier Joseph Stalin. Following the war, the city's older landmarks suffered under the rule of Mohammad Reza Shah. The Shah believed that ancient buildings such as large parts of the Golestan Palace, Takieh-ye Dowlat, the Toopkhooneh Square (pictured to the right), and others should not be part of a modern city. They were systematically destroyed and modern 1950s and 1960s buildings were built in their place. The decision to carry this out is presently largely seen as a foolish mistake that hurt the visual fabric of the city beyond repair.

On September 8, 1978, demonstrations against the Shah led to riots. The army reportedly opened fire on the demonstrating mob. Martial law was installed in the wake of the ensuing revolution, from 1978–79.

During the 1980–88 Iran-Iraq War, Tehran was the scene of repeated Scud missile attacks and air strikes against random residential and industrial targets within the city, resulting in thousands of civilian casualties. Material damage was repaired soon after each strike.