Although the early history of Dubai is not very well documented, archeological discoveries suggests that, as long as four thousand years ago, small fishing communities lived along the coast of the Arabian Gulf on the site of what we know today as Dubai.

There are records of the town of Dubai ("Dubai") from 1799, which was a dependent of the settlement of Abu Dhabi until 1833. The then sheikh of Dubai was a signatory to the British sponsored "General Treaty of Peace" of 1820.

In 1833, the Al Maktoum dynasty of the Bani Yas tribe left the settlement of Abu Dhabi and took over the town of Dubai, "without resistance". From that point on, Dubai, a newly independent emirate was constantly at odds with the emirate of Abu Dhabi. An attempt by the Qawasim pirates to take over Dubai was thwarted.

In 1835, Dubai and the rest of the Trucial States signed a maritime truce with Britain and a "Perpetual Maritime Truce" about two decades later. Dubai came under the protection of the United Kingdom by the Exclusive Agreement of 1892.

The rulers of Dubai fostered trade and commerce, unlike the town's neighbors. The successful early development was in large parts due to the foresight of Dubai’s rulers. The city has benefited from the stabilizing influence of two exceptionally long rules: that of H H Shaikh Saeed Bin Maktoum from 1912 to 1958, followed by that of his son, H H Shaikh Rashid Bin Saeed al-Maktoum.

For many years prior to his father’s death in 1958 Shaikh Rashid has played a leading role in directing the state. Since then he has guided Dubai in its expansion from a small, old-world town to a modern state with excellent communication, and industrial infrastructure, and all the comforts of contemporary life. He ruled Dubai for over 30 years, during which time large projects like the Jebel Ali free zone, World Trade Centre and Dubai International Airport were sanctioned.

The town of Dubai was an important port of call for foreign tradesmen (chiefly Indians), who settled in the town. Until the 1930s, the town was known for its pearl exports. The international trade which flowed from Dubai’s cosmopolitan contracts was the basis of it’s rapidly increasing prosperity. This gave the city an early start in development before the beginning of oil production in the late 1960s. Like the other towns along the coast, Dubai had been severely affected by the decline of the pearling industry, due to competition in the 1930s from Japanese cultured pearls, and by the drop in trade in the Second World War.

After the devaluation of the Gulf Rupee in 1966, Dubai joined the newly independent state of Qatar to set up a new monetary unit, the Qatar/Dubai riyal. Dubai maintained its importance as a trade route through the 1970s and 1980s. Dubai and its twin across the Dubai creek, Deira (independent at that time), became important ports of call for Western manufacturers. Most of the new city's banking and financial centers were headquartered in this area.

In 1971 when the British left the Persian Gulf, Dubai together with Abu Dhabi and five other emirates, formed the United Arab Emirates. The UAE dirham was adopted in 1973 as the uniform currency, by Dubai and the other emirates.