Mandu was founded as a fortress and retreat in the 10th century by Raja Bhoj. It was conquered by the Muslim rulers of Delhi in 1304. After the victory of Mughals in the early 16th century on Delhi, Mandu came under the administration of Afghan Dilawar Khan, the Governor of Malwa. Hoshang Shah, son of Dilawar Khan, transferred his capital to Mandu. Until 1561, it remained under the Afghans when Akbar defeated Baz Bahadur, one of the Afghan chieftains ruling a part of central India. Baz Bahadur fled Mandu instead of facing the Mughal army. During the administration of Marathas, the capital of Malwa was shifted back to Dhar and Mandu became a ghost city for some time.

Jahaz Mahal (or the Ship Palace) is probably the most famous building in Mandu. This ship-like structure was constructed by Ghiyas-ud-din, son of Mohammed Shah, for his harem. According to the legends, this harem was home to 15,000 maidens. There are two lakes on the east and west side of the palace that create a perfect illusion of a ship with its rectangular shape.

Taveli Mahal is located just south of Jahaz Mahal and now houses the antiquity gallery of the Archeological Survey of India.

Hindola Mahal (or Swing Palace) was a pleasure dome that gives the impression that the inward slopes of the walls are swaying.

Hoshang's Tomb is located immediately behind the mosque and reputed to be the oldest marble structure in India. The tomb was constructed in 1435 and depicts typical Hindu influences including carved marble lattice screens (jali). It is said that Shahjahan sent his architects to study this double-domed structure before constructing Taj Mahal.