According to Babad Dalem, a breakdown in royal authority following a palace coup sometimes in the 16th century resulted in regional lords attaining greater autonomy.

Especially the Dutch, missions to establish economic relations soon turn into military colonial expeditions: Following the fall of Klungkung as the last independent native realm on Bali, Dutch colonial administration either ruled the island indirectly (rulers of Karangasem and Gianyar as stedehouder, "viceroy") or directly administered public administration in the absence of local rulers.

By 1938, Paruman Agung, a council of rajahs of Bali was established, and the regents and viceroys were consecrated as kings (including Klungkung) reestablishing the kingdoms as "self-governing realms" within the Netherlands East Indies.

In 1946, Dutch colonial administration returned to the island, and began to introduce Bali rulers to the idea of a federation of states in eastern Indonesia, in opposition to unitarian Indonesian Republic.

Currently, the regency is the smallest (excluding Denpasar, which is a city and smaller in size) and least populated in Bali, as well as least visited by tourists.