Kapaz PFC was founded in 1959 as Toxucu and played in the Soviet First League. However, team promoted to Soviet Top League in 1968 after gaining first place in Soviet First League in previous season. The club also carried Taraggi and Toxucu names during its history, however became famous in modern period as Kapaz when renamed in 1982.
In 1991, club once again renamed to Kapaz after Azerbaijan's independence from Soviet Union and won Azerbaijan Premier League titles three times. In 1997, Kapaz were known for their unbeaten run as club's final record for the 1997–1998 league campaign stood at 22 wins, 4 draws and 0 losses, out of 26 games total, an unbeaten run not matched in any single season by any team in an Azerbaijani league division.
Kapaz, one of the most prominent football clubs in Azerbaijan, entered financial difficulties during the late 2000s. Since 2002, club found themselves slipping further and further down the table, which influenced by financial difficulties. The financial collapse of Kapaz resulted in a great deal of discussion within Azerbaijani football. Major Azerbaijani companies, reportedly "concerned at the current uncertainty about the club's future and its backers" declined to provide Kapaz with the corporate banking facilities it needed.
The club have one of the biggest number of supporters population alongside Neftchi Baku and Khazar Lankaran in Azerbaijan. The fanbase is large and generally loyal and like most major Azerbaijani football clubs, Kapaz have a number of domestic supporters' clubs, including the Khamsa Supporters Club, which works closely with the club and maintains a more independent line. The club's most popular celebrity supporters are the likes of Olympic wrestling champion Toghrul Asgarov.
Azerbaijani teams are limited to nine players without Azerbaijani citizenship. The squad list includes only the principal nationality of each player; several non-European players on the squad have dual citizenship with an EU country.