Gonder was a capital city of Ethiopia from 17th to 19th century and was founded by Emperor Fasilides around the year 1635, and grew as an agricultural and market place. Tradition states that a buffalo led the Emperor Fasilides to a pool beside the Angereb, where an "old and venerable hermit" told the Emperor he would locate his capital there. Fasilides had the pool filled in and built his castle on that same site. The emperor built his still standing palace, swimming pool, archive and a total of seven churches. During the seventeenth century, the city's population is estimated to have exceeded 60,000 and was the second largest city in the world in 1678, the visiting Armenian bishop Hovannes remarked that the city was "twice as big as Istanbul". Many of the buildings from this period survive, despite the turmoil of the eighteenth century. By the reign of Iyasu the Great, Gondar had acquired a sense of community identity; when the Emperor called upon the inhabitants to decamp and follow him on his campaign against the Oromo in Damot and Gojjam, as had the court and subjects of earlier emperors, they refused. The town served as Ethiopia's capital until Tewodros II moved the Imperial capital to Magadala upon being crowned Emperor in 1855; the city was plundered and burnt in 1864, then devastated again in December, 1866. Abdallahi ibn Muhammad sacked Gondar when he invaded Ethiopia June 1887. Gondar was ravaged again in 23 January in the next year, when the Sudanese invaders set fire to almost every one of the city's churches, and at last during the Italian occupation in 1936 the English bombs to expel the Italians destroyed Gonder. 

The modern city of Gondar is popular as a tourist attraction for its many picturesque ruins in the Royal Enclosure, from which the Emperors once reigned. The most famous buildings in the city lie in the Royal Enclosure, which include Fasilides Castle, Iyasu's Palace, Dawit's Hall, a banqueting hall, stables, Mentewab's Castle, a chancellery, library and three churches. Near the city lie Fasilides' Bath, home to an annual ceremony where it is blessed and then opened for bathing; the Qusquam complex, built by Empress Mentewab; the eighteenth century Ras Mikael Sehul's Palace and the Debre Berhan Selassie Church. Gonder was the important center for adminstrative, comerce, religion, culture and noted for skill of different crafts.