Banswara district was formerly a princely state ruled by Maharavals and was home to tribal Bhils, who constitute more than half of the city's population. The city was ruled by a Bhil ruler Bansia and Banswara was named after him. Jagmal Singh became the first Maharaval of Banswara after defeating and killing Bansia.

However, there is another theory that says the city is called so because of the abundance of bamboos (bans) in the district's forests. In religious connotations, the place is also called 'Lodhikashi' or Little Kashi because of the presence of eleven and a half Swayambhoo Shivlings here.

In 1913, there was a revolt by Bhils under the leadership of social reformer Govindgiri. In a massacre termed as the mini Jallianwala Bagh Kand, hundreds of Bhils were shot dead at Mangarh hillock where they were holding a peaceful meeting. The place has since become sacred and is called the Mangarh Dham.

Banswara state and Kushalgarh chieftainship got merged in Greater Rajasthan in 1949 when all princely states were merged with the Union of India. Banswara was carved out as a separate district ever since.

The district is situated in the valleys of the Aravallis and has a rich reserve of both flora and fauna. Tribals are the natives here and their culture is seen here in its original form.
The district is surrounded by Gujarat and Madhya Pradesh, and hence boasts of a compact culture. The Vagdi culture of this area is actually a mixture of Gujarati, Rajasthani, Malwi and Mewari cultures.

About 160 kilometers from Udaipur, Banswara district is bounded by Dhariawad tehsil of Udaipur and Pratapgarh tehsil of Chittorgarh on the north. In the east, it shares its boundaries with Ratlam district of Madhya Pradesh; in the west by with Sagwara and Aspur of Dungarpur and in the south with Jhabua of MP. Panchmahal district of Gujarat also touches Banswara in the southwest.