The different divisions of Newars had different historical developments. The common identity of Newar was formed in the Kathmandu Valley. Until the Gorkha conquest of the valley in 1769, all the people who had inhabited the valley at any point of time were either Newar or progenitors of Newar. So, the history of Newar correlates to the history of the Kathmandu Valley prior to the establishment of the modern state of Nepal.
The earliest known history of Newar and the Kathmandu Valley blends with mythology recorded in historical chronicles. One such text, which recounts the creation of the valley, is the Swayambhu Purana. According to this Buddhist scripture, the Kathmandu Valley was a giant lake until the Bodhisattva Manjusri, with the aid of a holy sword, cut a gap in the surrounding hills and let the water out. This apocryphal legend is supported by geological evidence of an ancient lakebed, and it provides an explanation for the high fertility of the Kathmandu Valley soil.
According to the Swayambhu Purana, Manjusri then established a city called Manjupattan (Sanskrit "Land Established by Manjusri"), now called Manjipā, and made Dharmākara its king. A shrine dedicated to Manjusri is still present in Majipā.
No historical documents have been found after this era till the advent of the Gopal era. A genealogy of kings is recorded in a chronicle calledGopalarajavamsavali. According to this manuscript, the Gopal kings were followed by the Mahispals and the Kirats before the Licchavis entered from the south. Some claim Buddha to have visited Nepal during the reign of Kirat king Jitedasti. he Licchavi dynasty ruled for at least 600 years, followed by the Malla dynasty in the 12th century AD.
Newar reign over the valley and their sovereignty and influence over neighboring territories ended with the conquest of the Kathmandu Valley in 1769 by the Gorkhali Shah dynasty founded by Prithvi Narayan Shah.Systematic brutal suppression of the Newar people was pursued for generations during early dynastic rule in order to discourage them from any political aspiration.
Prior to the Gorkha conquest, the borders of Nepal Mandala extended to Tibet in the north, the nation of the Kirata in the east, the kingdom of Makwanpur in the south and the Trishuli River in the west which separated it from the kingdom of Gorkha. Newars developed a division of labour and a sophisticated urban civilization unseen elsewhere in the Himalayan foothills .
