The history of Bandar Seri Begawan is inextricably linked with Kampong Ayer — the famous "Water Village," which is considered one of the largest settlements of its kind in the world. The first mentions of a settlement on the Brunei River in Chinese and Arabic sources date back to the 6th–7th centuries, testifying to its ancient origins. For centuries, it was Kampong Ayer that served as the de facto centre and heart of the Sultanate, earning the title "Venice of the East." The city on land, as we know it today, began to develop actively only in the 20th century. Until 5 October 1970, the city was named Brunei Town (or Bandar Brunei), after which it was renamed in honour of the ruling Sultan's father, who assumed the title "Seri Begawan" after his abdication.
The city's development was driven by several strategic advantages. Its geographical position at the mouth of the Brunei River provided convenient access to the South China Sea, transforming the city into a vital maritime and trading hub, while the river served as a safe harbour and transport artery. For centuries, Bandar Seri Begawan was a bustling centre of commerce where local merchants exchanged camphor, pepper, and other goods with traders from China, India, and Arab countries. Furthermore, as the capital of the powerful Brunei Sultanate, the city was the centre of the region's political, religious, and administrative life, hosting the Sultan's residence and key state institutions.
The early life of the city was focused on the water. Culture and economy were shaped around the unique lifestyle of Kampong Ayer, where houses were built on stilts and connected by wooden walkways. The economy was based on fishing, shipbuilding, and handicrafts, such as silverware crafting and weaving. Culturally, the city developed under the strong influence of Malay traditions and Islam, which was reflected in the architecture, customs, and the central role of the Sultan in society.