The history of P.D. Khan dates to 326 BC, when Alexander The Great and his troops camped in the area of Jalalpur Sharif prior to their battle with Raja Pourus. During the regime of Maharaja Rangit Singh, P.D. Khan was the second most important town after Amritsar (India) and was the largest grain market in the Western Punjab. However this magnificent town gradually lost its glory due to continued neglect and other natural calamities. 

P.D. Khan was the district headquarter of district Jhelum (1849). In 1850, Jhelum was declared as district headquarter and P.D Khan was turned into a sub-division. 

P.D. Khan was named after a Muslim saint Dadan Khan who served the local people with his religious teachings and convinced a large number of people to adopt Islam as their religion.