As per chronicles of Kutch Gurjar Kshatriyas, many clans of their community, especially Gohil, Bhatti, Jethwa, Solanki, Rathod, Visavaria and Brahmin clans shifted to Mandvi in between 15th to 16th Century AD from Dhaneti.
The establishment of the town dates back to the late 16th century (1581 AD) and is attributed to the first Jadeja ruler of Kutch, Rao Khengarji .
Times were turbulent until the arrival of the British who brought the kingdoms under their umbrella. By then Kutch was one of the largest princely states in India and the Maharao was awarded a salute of 17 guns, the second highest in Gujarat after the Maharaja of Baroda.
Mandvi was originally a fortified town having a fort wall of about 8 m high and 1.2 m wide stone masonry. The fort had several gateways and 25 bastions; but at present, most of the wall has disappeared. The bastion on the southwest is largest and acts as a lighthouse.
In the heyday of maritime trade, before the arrival of steamboats, Mandvi was a rich and prosperous town, earning four times more revenue from export than import. It was a profit-making centre of the Kutch state, surpassing the capital city of Bhuj in terms of wealth.
In 18th century, the Mandvi merchants collectively owned a fleet of 400 vessels trading with East Africa, Malabar coast, the Persian Gulf and Calcutta in eastern India via the ports of Arabia, Persian gulf and the western coast of India, trading cotton, rice, salt and pottery of India for ivory, cloves and rhino hide from Africa. Even Vasco Di Gama is said to have used sailors from Mandvi to navigate the stretch from Mombasa to Zanzibar. In the early 19th century, it was a major port of entry for the inland trade with Malwa, Marwar and Sindh.
Mandvi was at the junction of two famous trade routes the maritime spice trade-route and the desert camel caravan route, acting as an important trade centre.
As most of the top ports of India were controlled by Europeans, especially the Portuguese, even the Mughals held the Maharaos of Kutch in high esteem, as they needed the port of Mandvi for exports, imports and also for pilgrimages to Mecca.