Istakhr first appears in history as an Achaemenid city. It gained its importance not only from its close association with Persepolis: it also commanded the western end of an ancient caravan-route that ran from the Indus Valley via Kandahar and Sistan to Persia.
The city temporarily became the capital of Sassanian Persia during the reign of Ardashir I (224-242) before the capital moved to Ctesiphon, in Mesopotamia. During the Sasanid period (224-651) the royal treasury of the empire, known as ganj ī šāhīgān, is said[by whom?] to have been in Istakhr. In 915-916, Masʿūdī himself saw in a house at Istakhr owned by a Persian noble, "the large and very fine manuscript" of a work copied in 731 from original documents in the royal treasury.
In 659 CE, Caliph Ali sent Ziyad ibn Abi Sufyan to suppress a Persian rebellion in Istakhr. Ziyad succeeded at this and stayed on as governor. For a while, Abdallah ibn Mu'awiya (the designated leader of a Kaysanites Shia sub-sect) established himself at Istakhr from where he ruled for a few years over Fārs and other parts of Persia, including Ahvaz, Jibal, Isfahan and Kerman from 744 to 748 until fleeing to Khurasan from the advancing Umayyad forces. After being rebuilt[when?], the city lost its importance to Shiraz. Today only an archaeological site remains.