Kailasahar's history is deeply intertwined with the ancient and medieval legacy of the Tripura kingdom. According to local lore, the name "Kailasahar" is derived from "Kailash" (the mythical abode of Lord Shiva) and "Har" (another name for Shiva), referencing the town's historical association with the nearby Unakoti hills, an ancient Shaivite pilgrimage site featuring thousands of colossal rock-cut reliefs dating back to the 7th–9th centuries.
During the rule of the Manikya dynasty, Kailasahar served as an important administrative and strategic center. Before the capital of the princely state of Tripura was shifted to Agartala, parts of the Kailasahar region (such as Chhambal) were significant seats of royal power.
In modern history, the partition of India in 1947 profoundly shaped Kailasahar's demographic and cultural landscape. Due to its immediate border with the Sylhet district of erstwhile East Pakistan (now Bangladesh), the town saw a massive influx of Bengali Hindu refugees fleeing violence and instability. This migration transformed Kailasahar into a predominantly Bengali-speaking enclave, fostering a rich cultural milieu of literature, education, and trade that defines the town today.
