Luang Prabang rose to prominence as the capital of the first Lao kingdom (Lan Xang - land of the million elephants) from 1353 onwards. The city owes its present name to the Pha Bang, a revered Buddha image (now in the Royal Palace Museum) which was brought to the city by King Visoun during the golden age of Lan Xang in the early 1500s.

The fragmentation of the Lao kingdom at the end of the 16th century saw Luang Prabang become a militarily weak independent city state paying tribute to the surrounding kingdoms. Ultimately the 1887 sacking of the city by the Chinese Haw led the Luang Prabang monarchy to accept the protection of the French, whose influence led to the construction of the many fine colonial villas that sit harmoniously alongside the traditional Lao architecture.

The city fell into decline in the latter half of the 20th century following the reluctant withdrawal of the French, and the 1975 revolution which brought an end to the Luang Prabang monarchy. The relative poverty of newly-independent Laos perhaps helped save Luang Prabang from the ravages of 20th century city planning.

The reopening of Laos to tourism in 1989 resulted in a remarkable turnaround in the city's fortunes, as crumbling timber houses and colonial mansions were sensitively restored and transformed into immaculate guesthouses and boutique hotels. In 1995 the city was placed on the UNESCO World Heritage List.