The city was founded in 762 as the capital of the Abbasid dynasty of caliphs, and for the next 500 years it was the most significant cultural centre of Arab and Islamic civilization and one of the greatest cities of the world. It was conquered by the Mongol leader Hülegü in 1258, after which its importance waned.

Baghdad at the time was the largest city in the world, with a population of about 1 million. It was a perfectly round city, with all the important buildings in the centre. Situated between two rivers, it was also at the centre of the world's great trade routes and the caliph was therefore extremely wealthy.

The city of Baghdad is usually at the bottom of the list of countries in international indicators regarding quality of life, level of security, and democracy standards.

During the Middle Ages, Baghdad was an international trade centre on the Silk Roads networks. Its strategic geographical position made Baghdad a major central market for merchandise coming from diverse regions such as India, China, Daylam, or Anatolia.