From about 1500 Mozambique became a central trading post for the Portuguese on the new route to the East. But Arab commercial and slave trading settlements had existed here for centuries before their arrival. Much of both the Arab and Portuguese influence can be seen in Northern Mozambique, and especially on Ilha de Mocambique. 

The earliest inhabitants were small groups of hunters and gatherers such as the Khoi and the San.  In the eighth century, Arab traders began establishing trading posts along the coast. By the fourteenth century, those settlements had developed into independent city-states and were the main political and commercial centers in the area.

The Portuguese explorer Vasco da Gama was the first European to reach current-day Mozambique. When he arrived in 1498, the Maravi kingdom of the Mwene Matapa was in control of the central Zambezi Basin. Da Gama first landed in the Muslim island town of Moçambique, and by 1510 the Portuguese controlled trading from Sofala in present-day Mozambique north to Mogadishu in what is now Somalia.  The Mwene Matapa recognized Portuguese rule in 1629. The Portuguese called the area Terra da Boa Gente ("Country of the Good People").

In 1951, Portugal declared the colony an overseas province. In the 1960s, Mozambique was swept up in the pan-African movement toward independence.  Fighting between Frelimo, the Frente de Libertação de Moçambique (the Mozambican Liberation Front) lead by Eduardo Mondlane  and Portuguese troops broke out in 1964. Mozambique finally gained independence on 25 June 1975 after the colonial government collapsed.

Frelimo later faced external opposition for their Marxist policies.  Most notable was the rebel group called Renamo the (Mozambican National Resistance). The ongoing civil war that resulted disrupted Mozambique's economy, caused tens of thousands of deaths, and forced large numbers of people out of their homes and villages.

In the late 1980s, Frelimo, under pressure from the International Monetary Fund, renounced its Marxist stance in order to receive foreign aid. In 1990, a new constitution was introduced that allowed for a multiparty democracy. On 4 October 1992, the civil war officially ended when a peace accord was signed by Frelimo and Renamo leaders.