Ablé immigrants from Arabia migrated to what is now Djibouti in about the 3rd century B.C. Their descendants are the Afars, one of the two main ethnic groups that make up Djibouti today. Somali Issas arrived thereafter. Islam came to the region in 825.

Djibouti was acquired by France between 1843 and 1886 through treaties with the Somali sultans. Small, arid, and sparsely populated, it is important chiefly because of the capital city's port, the terminal of the Djibouti–Addis Ababa railway that carries 60% of Ethiopia's foreign trade. Originally known as French Somaliland, the colony voted in 1958 and 1967 to remain under French rule. It was renamed the Territory of the Afars and Issas in 1967 and took the name of its capital city on June 27, 1977, when France transferred sovereignty to the new independent nation of Djibouti. On Sept. 4, 1992, voters approved in referendum a new multiparty constitution. In 1991, conflict between the Afars and the Issa-dominated government erupted and the continued warfare has ravaged the country.

The dictatorial president, Hassan Gouled Aptidon, who had run the country since its independence, finally stepped aside in 1999, and Ismail Omar Guelleh was elected president. In March 2000, the main Afars rebel group signed a peace accord with the government. The fighting, severe drought, and the presence of tens of thousands of refugees from its war-torn neighbors, Ethiopia and Somalia, have severely strained Djibouti's agricultural capacity.