Ajaigarh was the capital of a princely state of the same name during the British Raj. Ajaigarh was founded in 1765 by Guman Singh, a bundelaRajput who was the nephew of Raja Pahar Singh of Jaitpur. After Ajaigarh was captured by the British in 1809, it became a princely state in the Bundelkhand Agency of the Central India Agency. It had an area of 771 mile² (1997 km²), and a population of 78,236 in 1901. The rulers bore the title of sawai maharaja. He commanded an estimated annual revenue of about £15,000/-, and paid a tribute of £460/-. The chief resided at the town of Nowgong[disambiguation needed], at the foot of the hill-fortress of Ajaigarh, from which the state took its name. This fort, situated on a steep hill, towers more than 800 ft (244 m) above the eponymous township, and contains the ruins of several temples adorned with elaborately carved sculptures. The town was often afflicted by malaria, and suffered severely from famine in 1868-1869 and 1896-1897.
The state acceded to the Government of India on January 1, 1950; the ruling chief was granted a privy purse of Rs. 74,700/-, and the courtesy use of his styles and titles. All of these were revoked by the government of India in 1971, at the time when these privileges were revoked from all erstwhile princes. The former princely state became part of the new Indian state of Vindhya Pradesh, and most of the territory of the former state, including the town of Ajaigarh, became part of Panna District, with a smaller portion going to Chhatarpur District. Vindhya Pradesh was merged into Madhya Pradesh on November 1, 1956.
As of 2001 India census, Ajaigarh had a population of 13,979. Males constitute 53% of the population and females 47%. Ajaigarh has an average literacy rate of 59%, which is lower than the national average of 59.5%; with 61% of the males and 39% of females literate. 16% of the population is under 6 years of age.