At an early date Muscat became an Arab trading port. The interior was peopled by various Omani tribes. The entire region was converted to Islam in the seventh century. The area's first contact with Europeans was in 1508, when Portugal conquered Muscat and gained control of the coast. The Portuguese were driven out in the 17th century by the Omanis, who soon extended their control over Zanzibar and other Portuguese possessions in East Africa.

In the mid-18th century, Persians took Muscat and other coastal towns. They were expelled by an Omani chieftain who established the Said dynasty. Under a successor, Muscat became the capital. Foreign rivalry for influence in the region developed. In 1798 a treaty with Great Britain gave the British exclusive trade privileges.

In the early 19th century, Oman was one of the most powerful states in Arabia. It virtually controlled the Persian Gulf and flourished from trade in slaves and spices. Economic decline set in at about mid-century, however. In 1856, rival heirs disputed succession to the throne. Agreement was reached in 1861, permanently dividing the empire into two sultanates—(1) Muscat and Oman and (2) Zanzibar. Muscat and Oman came under increasing British domination and in 1891 became a virtual British protectorate.

In 1913 Omanis in the interior rebelled against Sultan Faisal bin Turki's rule. He granted them tribal autonomy under an imam (a traditional religious leader) in 1920. The imam led another revolt in the 1950's, which was suppressed by Sultan Said bin Taimur with British aid.

Oil was discovered in 1964, but Sultan Said bin Taimur did not use the revenues for developing the country. In the southern province of Dhofar an insurgency, supported by neighboring Yemen (Aden), broke out against his rule. In 1970, he was overthrown by his progressive-minded son, Qabus bin Said. Sultan Qabus changed the country's name to Oman. Under his rule, Oman began a modernization program and emerged from its isolation. A consultative assembly, or majlis, was established in 1991 and expanded in 1994 and 1996. Its members are appointed by the sultan from candidates elected in national elections.

In 1981, Oman co-founded the Gulf Cooperation Council (GCC) to work on military defense and economic projects. In 1991, as part of the GCC, Oman helped liberate Kuwait after Iraq had invaded the country the previous year.