The station opened on 16 December 1996, as part of the first phase of the STAR system's opening, along with 13 adjoining stations along the Sultan Ismail to Ampang route.

The station stands between the eastern banks of the Gombak River and an intersection between Jalan Raja Laut, a major thoroughfare along the Gombak River, and Jalan Isfahan.

Bandaraya is the southernmost LRT station along the Gombak River.

The station is also within close proximity of several shopping complexes, the present Kuala Lumpur City Hall building, the Bank Negara headquarters, and Little India Precinct.

It was the first station on the line to have an interchange with another railway system and, prior to the opening of Kelana Jaya Line and remaining phases of the STAR lines, the only station of this kind, although there was no network integration in terms of fares or ticketing.