The state was founded in 1828, when Mir Painda Khan, the ruler of Amb, granted the area of Phulra as a small principality to his brother, Madad Khan. There is some uncertainty as to whether Phulra ranked as a full princely state of India before 1919, and until then it may have had the status of a feudatory landed estate or jagir, but it was given British imperial state recognition as Phulra was recognised as a princely state in 1919 and 1921, in the official Imperial Gazetteer of the Indian Empire. Phulrah had been under suzerainty of the Maharaja of Kashmir until 1889, when it accepted a British protectorate, entering indirect rule.
Madad Khan, the original Khan of Phulra, had two branches of offspring i.e. a senior branch and a junior branch. After the State of Phulra was abolished, both these branches continue to be represented in the area. The descendants of its last Khan, Abdul Latif Khan, remained in the area as private residents. The descendants of Khan Abdul Latif Khan were his sons, Khan Muhammad Faridoon Khan, and his grandson Khanzada Ali Raza Khan.. They comprised the senior branch of the former Phulra family.
Of the junior branch, Madad Khan had two other surviving sons, Bahadar Khan (from a Tanoli woman), whose descendants are still settled in Mangal Doga, Mahal and Masand villages; and Arsala Khan  who was born from a Gujjar woman and whose descendants still live in Gojra village. They are all private citizens today.