The history of Old Kaushambi dates back to even pre-Ramayan and Mahabharat periods. It was the capital of the Vatsa Mahajanapada, which was one of the 16 regions of Mahabharat. It is mentioned in Purana, Ramayana and Mahabharata, that the city was founded by a Chedi prince Kusa or Kusamba.

Kaushambi was regarded as one of the six most prosperous cities of India during the lifetime of Buddha. It was the junction of the routes for travelers from all the four corners of the country and therefore a hub of its trade and commerce.

The excavations in the city have also discovered several old coins, sculptures, idols, stupas and monuments that speak of its glorious history. Some of the monuments include the Ashoka Pillar, a Jain temple, a stone fortress and Ghositarma Monastery.

The place was consecrated by the visits and sermons of Buddha after the 6th and 9th year of his enlightenment. The old Kaushambi is, therefore, an important pilgrim destination of the Buddhists.