One major exception was that of the wealthiest and most powerful principality, Hyderabad, where the Nizam, Mir Osman Ali Khan, Asaf Jah VII, a Muslim ruler who presided over a largely Hindu population, chose independence and hoped to maintain this with an irregular army.

[8]: 224 In November 1947, Hyderabad signed a standstill agreement with the Dominion of India, continuing all previous arrangements except for the stationing of Indian troops in the state.

[9][10] Nizam's power had weakened because of the Telangana Rebellion and the rise of a radical paramilitary group known as the Razakars whom he could not put down.

On 7 September, Jawaharlal Nehru gave ultimatum to Nizam, demanding ban on the Razakars and return of Indian troops to Secunderabad.

[19] The Sunderlal Committee, appointed by Indian prime minister Jawaharlal Nehru, concluded that between 30,000 and 40,000 people had died in total in the state, in a report which was not released until 2013.

[21] Following the Nizam's forces surrender on September 17, 1948, a military government headed by Major General J. N. Chaudhuri who led Operation Polo was established.

A firman was issued by the Nizam on November 24, 1949 wherein he accepted henceforth the Indian Constitution to be applicable to the State of Hyderabad.

[25] Administratively, Hyderabad State was made up of sixteen districts, grouped into four divisions:[citation needed].

Hyderabad city remained as the joint capital of both Andhra Pradesh and Telangana for 10 years till 1st June 2024.