Kandahar is one of the most culturally significant cities of the Pashtuns and has been their traditional seat of power for more than 300 years. It is a major trading center for sheep, wool, cotton, silk, felt, food grains, fresh and dried fruit, and tobacco. The region produces fine fruits, especially pomegranates and grapes, and the city has plants for canning, drying, and packing fruit, and is a major source of marijuana and hashish en route to Tajikistan.
The region around Kandahar is one of the oldest known human settlements. A major fortified city existed at the site of Kandahar, probably as early as c. 1000-750 BCE, and it became an important outpost of the Achaemenid (Persian) Empire in the 6th century BCE. Alexander the Great had laid-out the foundation of what is now Old Kandahar in the 4th century BC and gave it the Ancient Greek name Αλεξάνδρεια Aραχωσίας (Alexandria of Arachosia). Many empires have long fought over the city due to its strategic location along the trade routes of southern, central and western Asia. Since the 1978 Marxist revolution, the city has been a magnet for groups such as Haqqani network, Quetta Shura, Hezbi Islami, al-Qaida and other terrorist groups. From late-1996 to 2001, it served as the de facto capital of the Taliban government until the Taliban were overthrown by US-led NATO forces during Operation Enduring Freedom in late-2001 and replaced by the government of President Hamid Karzai.
One hypothesis of the name suggests that "Kandahar" has evolved from "Iskandar", the local dialect version of the name Alexander, after Alexander the Great who founded the city in 330 BC and named it Alexandria in Arachosia. A temple to the deified Alexander as well as an inscription in Greek and Aramaic by Emperor Ashoka, who lived a few decades later, have been discovered in Kandahar. The Sri Lankan Pali work the Mahavamsa (Chap. XXIX) refers to the city as "the Greek city of Alasanda" when relating how its Indo-Greek King Menander I (165 BC – 135 BC), who practiced Greco-Buddhism, sent "a Greek (yona) Buddhist head monk" named Mahadharmaraksita (literally translated 'Great Teacher, Preserver of the Dharma') with 30,000 Buddhist monks to Sri Lanka for the dedication of the Great Stupa in Anuradhapura.
Ibn Battuta mentions Kandahar in the 14th century by describing it as a large and prosperous town three nights journey from Ghazni. It has been then mentioned extensively by Mughal Emperor Babur and others.
An alternative etymology derives the name of the city from Gandhara, the name of an ancient Hindu-Buddhist kingdom located along the Kabul and Swat rivers of Afghanistan and Pakistan; Kandahar is not in the former territory of Gandhara.