Phagwara was built by Shah Jahan as a market town. Over time, some people of Phagwara started farming and Phagwara took on a rural character. Phagwara Sharki covers the original rural Phagwara, which now is only covered by the area surrounding Sukhchainiana Gurdwara (Sukhchain Nagar) where some people continue to farm the land.In 1772 it became Part of the Ahluwalia Sikh Dynasty of Kapurthala. The Sixth Sikh Guru, Shri Guru Hargobind Sahib Ji visited this place in 1635 after winning the battle of Kartarpur and Palahi. Phagu, a great devotee of Guru Ji used to reside here. When Phagu came to know that Guru Ji had come after fighting against Mughals and thought that Mughals might be following him, he was worried and did not serve Guru Ji. Guru Ji said," Phagu Da Warra, Bahron Mitha Andron Khara". Therefore, Phagwara got its name from "Phagu-Da-Warra". Narur is the famous and big village in Phagwara. Jama Masjid was built by then Maharaj Kapurthala. Its main door is facing towards east in Mohalla Atishbazan and other west side door is on Gaushala road.
It is the main industrial place in the Kapurthala District because of its good location on the national highway. This city consists of many different types of industries like Wahid Sandhar Sugar Mills Limited, Jagjit Cotton Textiles (JCT) Mills Limited, The Sukhjit Starch & Chemicals Limited and there are many small scall industries manufacturing Electrical Accessories, Machine Tools, Agricultural Implements and Rubber. It is famous too all over the world for manufacturing of Oil Engine Parts.
Bazar Bansanwala, Sarafan Bazar and Gaushalla Bazar is the place of attraction for NRI People as these bazars are famous for Clothing & Jewellary. Phagwara is famous for NRI's, a big percentage of Punjabi NRI's belong to this area.
It is also Banking Hub of Kapurthala District. With more than 45 banks and 100 Offices it comes in the Top list of Indian Sub-Urban Cities in Banking Business.
It is famous for holy places like Shiv Mandir at Nimawala Chowk , Hanuman Mandir on G.T. road & Sri Durga Mandir at Sarafan Bazar. Vishwakarma mandir is the oldest sacred place situated at banga road. It has many historical & holy Gurdawaras like Sri Sukhchainana Sahib at Sukhchainan Nagar , Gurdwara Chhevin Patshahi Chaura Khoo in the interior of the town and Gurudwara Sri Guru Ravidas Maharaj on G.T.Road. It has mosques at Gaushalla Road & Palahi Road and Church too at G. T. Road as well at Hoshiarpur Road. There are also many other Sacred Places at different locations.