Buda was settled during the 9th century by Hungarian tribes, who built it on the Roman military camp Aquincum. The town was burned to the ground in 1241 by the Mongols, conquered by the Turks in 1541, and then conquered again by the Hapsburgs in 1686. Buda became the second city of the Hapsburg empire and prospered in this role; unfortunately, this alliance with Austria put it on the wrong side of both world wars. In 1872, Pest, Buda and Óbuda merged in a new city: Budapest. At the end of the World War II, a two-month battle for Buda between the Nazis and the Red Army and English-American bombing left all the bridges destroyed and the severed halves in the city in ruins. The cycle of occupation and revolt continued through the Cold War: Stalinist hard-liners kept the city in fear until Imre Nagy's reforms left the door open for the anti-Soviet uprising of 1956, which was quickly crushed by Soviet tanks. Subsequent "goulash-communist" governments stirred a little capitalism into Hungary's Eastern-bloc socialism, setting Budapest up to be the charming "Western city with Eastern flavour" that is today.

The name Buda is probably from the Slavic word for water, "voda", since Buda has numerous springs. Other explanation is that it was the name of Attila the Hun's brother or brother-in-law. Pest comes also from Old Slavic, meaning "cave" or "lime furnace", because there are many caves in this part of the city. According to other sources it originates in the Gaelic word for "mud".