The date marks the anniversary of the transfer of Kuala Lumpur from the state of Selangor to the federal government, which occurred on 1 February 1974.

The Federal Territory Day was introduced on 1 February 1974, four days after the Federal Territory Agreement was signed on 28 January 1974 by the Yang di-Pertuan Agong, Tuanku Abdul Halim Muadzam Shah of Kedah and the Sultan of Selangor, Almarhum Sultan Salahuddin Abdul Aziz Shah.

In addition, 1 February also has significance as the day of the formation of the Federation of Malaya in 1948.

The Federal Territory official awards and decorations were introduced on 1 February 2008.

The awards received by the Yang di-Pertuan Agong as the Head of State for the Federal Territories.