Panhala is the traditional residence of the sage Parasr. The Karavir or Kolhapur Puran a compilation of A.D. 1730, mentions Panhala as Pannagalaya or the home of Serpents. A copper plate found in Satara shows that in A. D. 1191-92 Panhala was the seat of the Silahara Bhoja Raja II. (1178-1209) Bhoja Raja is said to have built fifteen forts of which Bavada, Bhudargad, Panhala, Satara and Visalgad are the chief. On the establishment of the Adil Shahi dynasty of Bijapur in 1489, Panhala came under Bijapur and was fortified with great care. Numerous inscriptions in the fort refer to the reign of Ibrahim Adil Shah.

In 1659, immediately after the discomfiture of the Bijapur general Afzal Khan, King Shivaji took Panhala from Bijapur. In May 1660, to win back the fort from Shivaji, Ali Adil Shah II (1656-1672) of Bijapur sent Sidi Johar who laid siege to Panhala in which Shivaji had shut himself. After four months siege Shivaji escaped to Vishalgad, near Malkapur. This escape is famous with the sacrifies of Veer Shiva Kashid & Veer Baji Prabhu Deshpande. In 1673, Shivaji again took Panhala. After Chh. Shivaji, his son Chh. Sambhaji & In 1705 Tarabai, the widow of Rajaram (1689-1700) made Panhala their head-quarter. In 1782 the seat of the Kolhapur government was moved from Panhala to Kolhapur.