The state was established following the dissolution of the Bengal Sultanate, a major trading nation in the world, when the region was absorbed into the Mughal Empire.

Professor Richard Eaton suggests Bengal became a terminus of a continent-wide process of Turko-Mongol conquest and migration because its physical features gave it such a fertile soil, and a favourable climate.

However, in historian Tapan Raychaudhuri's view, "the consolidation of Mughal power in Bengal and the pacification of the province really began in 1594".

The Mughal conquest of Chittagong in 1666 defeated the (Burmese) Kingdom of Arakan and reestablished Bengali control of the port city, which was renamed as Islamabad.

[23] The Chittagong Hill Tracts frontier region was made a tributary state of Mughal Bengal and a treaty was signed with the Chakma Circle in 1713.

Shuja fled to the Kingdom of Arakan, where he and his family were killed on the orders of the King at Mrauk U. Shaista Khan was an influential viceroy during the reign of Aurangazeb.

Viceroy Ibrahim Khan II gave permits to English and French traders for commercial activities in Bengal.

During Azim-us-Shan's tenure, his prime minister Murshid Quli Khan emerged as a powerful figure in Bengal.

[citation needed] Under the early nawabs, Bengal became the financial backbone of the Mughal court, contributing more than half the funds that flowed into the imperial treasury in Delhi.

Factories were set up in Murshidabad, Dhaka, Patna, Sonargaon, Chittagong, Rajshahi, Cossimbazar, Balasore, Pipeli, and Hugli among other cities, towns, and ports.

The South Indian Kingdom of Mysore led by Tipu Sultan overtook the Nawab of Bengal as the subcontinent's wealthiest monarchy; but this was short-lived and ended with the Anglo-Mysore War.

The Nawabs of Bengal entered into treaties with numerous European colonial powers, including joint-stock companies representing Britain, Austria, Denmark, France and the Netherlands.

[35] 400,000 civilian Bengalis were massacred by the Bargis (Maratha warriors) including textile weavers, silk winders, and mulberry cultivators[36][37] causing widespread economic devastation for the proto-industrializing textile-based economy of Bengal.

[42] By the late-18th century, the British East India Company emerged as the foremost military power in the region, defeating the French-allied Siraj-ud-Daulah at the Battle of Plassey in 1757, that was largely brought about by the betrayal of the Nawab's once trusted general Mir Jafar.

According to João de Barros, Bengal enjoyed military supremacy over Arakan and Tripura due to good artillery.

[citation needed] Its Lalbagh Fort was an elaborately designed complex of gardens, fountains, a mosque, a tomb, an audience hall (Diwan-i-Khas) and a walled enclosure with gates.

[34] The city of Murshidabad also became a haven of Mughal architecture under the Nawabs of Bengal, with the Caravanserai Mosque (1723) being its most prominent monument.

Dhaka's jamdanis enjoyed a loyal following and received imperial patronage from the Mughal court in Delhi and the Nawabs of Bengal.

[citation needed] The region exported grains, fine cotton muslin and silk, liquors and wines, salt, ornaments, fruits, and metals.

[citation needed] Chittagong was the largest seaport, with maritime trade routes connecting it to Arakan, Ayuthya, Aceh, Melaka, Johore, Bantam, Makassar, Ceylon, Bandar Abbas, Mocha and the Maldives.

There are sparse accounts of the Bengal revenue administration in Abul Fazl's Ain-i-Akbari and some in Mirza Nathan's Baharistan-i-Ghaibi.

[59] According to the former, The demands of each year are paid by instalments in eight months, they (the ryots) themselves bringing mohurs and rupees to the appointed place for the receipt of revenue, as the division of grain between the government and the husbandman is not here customary.

Bengali peasants rapidly learned techniques of mulberry cultivation and sericulture, establishing Bengal Subah as a major silk-producing region of the world.

Compared to Britain, the price of grain was about one-half in South India and one-third in Bengal, in terms of silver coinage.

[61] In the 17th century, Bengal was an affluent province that was, according to economic historian Indrajit Ray, globally prominent in industries such as textile manufacturing and shipbuilding.

[62] Many historians have built on the perspective of R. C. Dutt who wrote, "The plunder of Bengal directly contributed to the Industrial Revolution in Britain.

Ray states that "Bengali entrepreneurs continued in industries such as cotton and silk textiles where there were domestic market supports", and major deindustrialisation occurred as late as the 1830s to 1850s.

During this era, the most important center of jute and cotton production was Bengal, particularly around its capital city of Dhaka, leading to muslin being called "daka" in distant markets such as Central Asia.

In 1703, Murshid Quli Khan, then diwan (prime minister in charge of finance) of Bengal shifted his office from Dhaka to Maqsudabad and later renamed it Murshidabad.

[71] Growing regional autonomy caused the Mughal Court to establish a hereditary principality in Bengal, with Khan being recognised in the official title of Nazim.