In 993 AD a place named "Poztupimi" (Slavic for "under the oak trees) was first mentioned.
Around 1220 a settlement of thatched clay houses was founded in the area near today's "Alter Markt". In 1345 Potsdam was issued the town charter but continued to belong to different rulers until in 1417 under Frederic I the Hohenzollern reign began.
During the Thirty Years' War the margrave Brandenburg was a major battlefield and the town with its up to then 2,000 inhabitants was looted and devastated. Until 1688 William I enormously helped to re-construct the town by choosing Potsdam as his second residence and building a city palace. The 'Potsdam Edict' invited protestants who were persecuted for their religious beliefs in France to come to Brandenburg and 20,000 Huguenots accepted his invitation.
William's I ostentatious son made himself first king of Prussia—King Frederic I. His son, King Frederic William I, enlarged Prussia's military powers and made Potsdam a garrison town. He also had 130 houses, a town wall as well as the baroque Nicolai Church built. Between 1732 and 1742 the so-called 'Dutch Quarter' was erected.
King Frederic William's I artistic and sensitive son, King Frederic II, took over power in 1740. He enlarged the army and started the Silesian Wars which ended with Prussia being a major power. The city palace was renovated and became the King's winter residence. Sanssouci Palace was built as well as the New Palais and thus Potsdam's cultural heritage started to become world famous.
Napoleon's troops occupied the town from 1806 until 1808 during the Napoleonic Wars. The members of the royal family managed to escape.
Only from 1815 onward the monarchy regained power. Consequently, many new buildings were erected. The King's architect Karl Friedrich Schinkel and his landscape designer Peter Joseph Lenné influenced the appearance of Potsdam enormously. Designing Klein-Glienicke palace and park started in 1824, followed by Charlottenhof palace and Babelsberg palace and park.
After the end of World War I Emperor William II resigned and thus ended the reign of the Hohenzollern in Prussia.
After the end of World War II most of the inner parts of the town had been destroyed. In Cecilienhof palace the Potsdam Peace Conference took place.
Since 1912 the history and development of the German film industry is strongly linked to Babelsberg. In addition to this traditional site today there are also the studios of the "Ostdeutscher Rundfunk Brandenburg" to be found in Potsdam. Furthermore, Potsdam has a long reputation as "City of Science".
Presently, Potsdam is the capital of the state of Brandenburg.
In 1991 the UNESCO declared Potsdam world cultural heritage.