The history of the town of Sagar dates back to about 1660 A.D. When Udan Shah, a descendant of Nihal Shah, built a small fort on the site of the present one, and founded a village close to it called Parkota which is now part of town. The present fort and a settlement under its walls was founded by Govind Rao Pandit, an officer of the Peshwa, who held charge of Sagar and the surrounding territory after 1735 A.D., when it came under the Peshwa’s possession.
In 1818 A.D., the greater part of the district was ceded by the Peshwa Baji Rao II to the British Government, while different parts of the rest of the present district of Sagar came in the possession of the British at different times between 1818 and 1860. The Dhamoni pargana of Banda tahsil was ceded in 1818 A.D. by Appaji Bhonsla. The Bhera pargana of Banda tahsil was acquired by transfer from the Bundelkhand States in 1818 A.D. The parganas, Rahatgarh in Sagar tahsil and Garhakota, Deori, Gourjhamer and Naharmow in Rehli tahsil collectively known as Punch Mahal were originally made over to British by Sindhiya at different dates from 1820 to 1825 for management. The Shahgarh pargana of Banda tahsil was confiscated in 1857 in consequence of the rebellion of the chief. The Kanjia pargana of Khurai tahsil was acquired from Sindhia by a treaty in 1860 A.D. A small area in the north -east corner of the tahsil around the village of Hirapur was similarly transferred to the British from the Charkhari State to Bundelkhand and added to the district after the uprising of 1857.

Administratively, the position of Sagar and the neighbouring territories underwent frequent changes. The Saugor territory was, first of all, placed under the superintendent of Political Affairs of Bundelkhand. Later, in 1820, this area, called the Saugor and Nerbudda Territories, was placed under the administration of an Agent to the governer-General. When the North-Western Province was constituted in 1835, the Saugor and Nerbudda Territories were included in this province. In 1842 occurred the Bundela rising, the quelling of which demanded a more direct attention by the Governor-General. But order was restored in the following year, and the Saugor and Nerbudda Territories were again placed under the political control of an Agent to the Governor-General. The arrangement however, was not found to be satisfactory and these territories were once again restored to the North-Western Provinces in 1853. Thereafter in 1861 the Saugor and Nerbudda territories, along with the Nagpur state formed a Commissioner’s Province called Central Provinces.
Sagar, which was the headquarters of the Sagar Commissionership for a short period, ceased to be so in 1863-64, when this district was incorporated with Jabalpur Commissionership. In the year 1932 the district of Damoh was added to Sagar district and was administrated as Sub-Division. In 1956, however, Damoh Sub-Division was again separated from the district to form a separate district and Sagar district consisted of four tehsils viz, Sagar, Khurai, Rehli, Banda.