D. I. Khan grew prosperous as a trading centre for Powindah nomads, during Nader Shah's invasion of the Mughal Empire.

The present city was founded by Nawab Sher Muhammad Khan of the Saddozai clan in 1825, and now stands four miles (6  km) away from the permanent channel of the river, atop a small plateau.

[9] Nawab Sadozai took into consideration the opinions of Diwan Lakhi Mal and Tej Bhan Nandwani for the city's reconstruction.

[11] An eight foot mud wall with nine gates was built around the city during this time as well,[10] some of which such as the Kaneran Wala and Sakki survive until today.

[4] D. I. Khan remained under Sadozai rule from the nearby town of Mankera until it was annexed by Bhatti Jatsikh ruler Maharaja Nau Nihal Singh of the Sikh Empire in 1836.

[10] The city suffered under punitive taxes that lead to frequent complaints in the Sikh Darbar at Lahore, resulting in several changes of Kardar.

[10] D. I. Khan's first deputy commissioner under British Indian Empire was General Henry Charles Van Cortland, who arrived in February 1848, before departing later that year to quell a revolt in nearby Multan.

[10] Under his rule, city's infrastructure and colonial administration system were established in which top posts were exclusively occupied by the British.

[18][19] In 2014, the wide-scale Operation Zarb-e-Azb was launched against militants throughout Pakistan, which resulted in a greatly improved security environment by 2016, although on January 4, 2017 15 people including five policemen were killed when a remote control planted bomb exploded on Bannu Road.

[21] As part of the 2015 China-Pakistan Economic Corridor, it was announced that D. I. Khan would be the terminus of the Hakla–Dera Ismail Khan Motorway — a four-lane controlled access motorway, 280 km in length, that is to begin at the M1 near Islamabad and serve as part of the Western Alignment of the economic corridor.

[22] On 3 November 2023, a bomb blast occurred in Dera Ismail Khan, in which a number of people were killed and injured.

Rain mainly falls in two distinct periods: in the late winter and early spring from February to April, and in the monsoon in July and September.

[citation needed] Saraiki are main ethnic groups in Dera Ismail Khan District in simple majority.

Languages of Dera Ismail Khan District (2023 Pakistani census) There are 1,198,862 Saraiki, 582,703 Pashto, 31,152 Urdu, 4,765 Punjabi, 863 Sindhi, 791 Balochi, 490 Kashmiri, 2,738 Hindko, 5 Brahui, 18 Shina, 2 Balti, 3 Kalasha & 524 others of total 1,822,916 [27]

[citation needed] The third major road connects it to Bhakkar in Punjab, situated on the eastern bank of the Indus River.