Pathankot and its surrounding areas once formed part of the territories of Nurpur (now in Himachal Pardesh). The dynasty of Nurpur was established by Jatpal alias Rana Bhet, a Taur Rajput from Delhi, who settled at Pathankot and took possession of all the country in the foot of the hills. Rajputs shifted their capital to the modern town of Nurpur (renamed after Begum Nurjahan) towards the end of seventeenth century. A muslim descendant of the Rajas of Nurpur Sayed Khan ruled over this territory till 1781. Pathankot also figures in Ain-i-Akbari as the Pargana Headquarter. Some believe it was a settlement of Pathans during the madieval times. The famous historian Cunnigham says that name of Pathankot came into vogue from the word Pathan.

In the past, pathankot had the largest timber market of asia.