Dhar was a princely state in Central India under the Bhopal Agency during the British Raj. The chiefs of Dhar claim descent from the great Paramara clan of Rajput (Kshtriya) who ruled Malwa from the 9th to the 11th century. The Paramaras were driven out by the Muhammadans, a section of the clan taking up their abode in the Deccan. From this section the present Maratha Puar trace their descent. In 1560 Dhar fell to Akbar and was included in the subah of Malwa. In 1690 the Marathas crossed the Narbada for the first time and plundered the town and district of Dharampuri belonging to this State. From this time it was never free from their depredations.
In 1723 the Nizam resigned the governorship of Malwa, and was succeeded in 1724 by Girdhar Bahadur, whose vigorous opposition to the Marathas delayed the establishment of their power in Central India. Udaji Puar, an officer in the paigah or body-guard of the Satara Raja, Sahu, came to the front about this time. In 1723 he had established himself temporarily in Dhar, but was driven out on the arrival of Girdhar Bahadur. In 1729-30, however, he managed to defeat both Girdhar and his successor Daya Bahadur, and thus finally cleared the way for the Maratha ascendancy.
. In 1742 the Peshwa formally confirmed Anand Rao Puar in the fief of Dhar by sanad. Anand Rao I now became one of the leading chiefs of Central India, holding considerable dominions and sharing with Holkar and Sindhia the rule of Malwa. Malcolm remarks it as a curious coincidence that the success of the Marathas should, by making Dhar the capital of Anand Rao and his descendants, have restored the sovereignty of a race who seven centuries before had been expelled from the government of that city and country.