The earliest known artifacts of human presence in the valley date from the Mesolithic period. Settlements have existed in the valley since Late Antiquity. The founding of Bakhchysaray was preceded by the Qirq Yer fortress Salaciq, and Eski Yurt - these have become incorporated into the urban area of modern Bakhchisaray.

Bakhchysarai first appears in historical documents in 1502. In 1532 Sahib I Giray, the Khan of Crimea from 1532 to 1551, established his residence there. From that time it served as the capital of the Crimean Khanate and the center of political and cultural life of the Crimean Tatar people. After several wars with Russia from 1737 (when General Burkhard Christoph von Munnich burnt down the capital of the Khanate) and following the annexation of the Crimean Khanate by the Russian Empire in 1783, Bakhchysarai became an ordinary town, having lost administrative significance. However, it remained the cultural center of the Crimean Tatars for several decades following, fostered by Ismail Gaspirali (1851-1914) who founded the local newspaper Tercuman.

During the Crimean War of 1853-56, Bakhchysarai essentially became a hospital town as wounded Russian soldiers from the battlefield were brought in to be treated. The Battle of the Alma, one of the earliest battles of the war, was waged not far from the city. But although the front line was close to the city, it was never taken by the Allies as the port city of Sevastopol was their primary wartime objective.

With the collapse of the Russian Empire and the unification of several socialist republics that spawned off the empire, Bakhchysarai became part of the Soviet Union in 1922.

The Surgun, the deportation of the Crimean Tatars on 18 May 1944 by the Soviet authorities, occurred in Bakhchysarai during the Second World War, as a response to the accusations that the Tatars collaborated with the Axis occupants. Although deportation of Tatar locals have begun as early as 1860 during the era of the Russian Empire, this served to be the final blow as this time the city was rendered empty of Crimean Tatars. The Crimean Tatars are not to return to the city until 1989 when Soviet policies cooled and relaxed.

Bakhchysarai became a part of newly-independent Ukraine in 1991. However, it became a de facto part of the Russian Federation when Russian Armed Forces invaded and annexed invaded and annexed the city and the whole of Crimea in 2014.

The name comes from a Persian word which means the Garden Palace. In Crimean Tatar, bagca means "garden" and saray means "palace".

Russian-speakers associate the town with the Romantic connotations of Alexander Pushkin's poem The Fountain of Bakhchisaray (1822). Adam Mickiewicz devoted some of the finest poems in his Polish-language Crimean Sonnets (1825) to the landmarks of Bakhchysarai (Polish: Bakczysaraj).

An asteroid, 3242 Bakhchisaraj, discovered by Soviet astronomer Nikolai Stepanovich Chernykh in 1979, takes its name after the town.

Famous attractions within or near Bakhchysarai are:

• Eski Yurt
• Chufut-Kale
• Khan's Palace
• Orta Juma Jami
• Tahtali-Jami Mosque
• Uspensky Cave Monastery
• Zincirli Madrasa

There is a network of well marked hiking trails around the town. All the main attractions are connected with red-marked trail.

Since 2011 thanks to the support of the Czech Government and USAID the Tourist information centre has been working.