The actual origin and history of Khandala is still obscure. The city has witnessed various ups and downs of many strong dynasties such as Marathas, Peshwas and British. Initially, Chattarpati Shivaji who was the founder of the first Maratha Empire ruled for some time around the city. After it, the Peshwas took hold of Khandala who were the founders of the second Maratha Empire. And finally the British defeated the Peshwas and took the power of ruling the city into their own hands. There are still some exquisite mansions and buildings in the town that stood as the testimonials of the bygone era.