A settlement was founded on the slopes of Mount Kahveci in the valley of Kızılırmak (the ancient Halys) by the Hittites. The town along with the region came under the rule of the Assyrian Empire around the 8th century BC; it was subsequently ruled by the Medes and then by the Persians in the reign of emperor Cyrus the Great in 546 BC. In 333 BC, Alexander the Great defeated the Persians. After his death, Cappadocia came under the rule of the dynasty of Ariarathes with Mazaka (present-day Kayseri) as capital. The Cappadocian kingdom became part -as province- of the Roman empire in the reign of Emperor Tiberius. It has been held for the site of the bishopric of Nyssa (Cappadocia), but that may rather be Harmandalı, Ortaköy.
The underground shelters around Nevşehir and Göreme were originally built to escape persecution by the pagan Roman authorities. Many of the churches, hewn in the rocks, date from these early years of Christianity. Even when Theodosius I made Christianity the official religion of the empire, the caves offered protection for the local people during raids by the Sassanid Persians circa 604 AD and by the Islamic Caliphate circa 647 AD. And when Iconoclasm became state policy in the Byzantine empire, again the caves of Nevşehir became shelters for those escaping persecution.
The castle on the hill dates from the Byzantine period, when the region was on the frontline in the (holy) wars against the Islamic Caliphate.
At the Battle of Manzikert (present-day Malazgirt) in 1071 AD, the Byzantine emperor Romanos IV was defeated by the Seljuk Sultan Alp Arslan. This led to the occupation of Anatolia by the Seljuks by 1074 AD and Nevşehir along with the rest of the region became part of the Seljuk Sultanate of Rum, then under the rule of the Karamanid dynasty in 1328 AD and finally under rule of the Ottoman empire around 1487 AD and was renamed "Muşkara". It remained a relatively insignificant settlement until the early 18th century.
The present-day city owes its foundation to the grand vizier and son-in-law of the Sultan Ahmed III, Nevşehirli Damat İbrahim Pasha who was born in Muşkara and therefore took a great interest in its construction as a city. The small village with only 18 houses, formerly under the administration of the kaza of Ürgüp, was rapidly transformed with the building of mosques (the Kurṣunlu Mosque), fountains, schools, soup kitchens, inns and bath houses, and its name was changed from Muşkara to "Nevşehir" (meaning New City in Persian and Ottoman Turkish).
The city is located at a distance of 290 km (180 mi) from the capital Ankara, and is within the historical region of Cappadocia.
The traditional main sources of income of the city -- carpet weaving and viticulture -- have been overtaken by tourism, because of its proximity to the underground shelters, the fairy chimneys, monasteries, caravanserais and the famous rock-hewn churches of Göreme.
A multiday track running ultramarathon of desert concept, called Runfire Cappadocia Ultramarathon, is held since 2012 annually in July. The race tours 244 km (152 mi) in six days through several historic places across Cappadocia reaching out to Lake Tuz.
Nevşehir has a warm dry-summer continental climate (Köppen climate classification Dsb), with cold and snowy winters and warm and dry summers. Rainfall occurs mostly during late spring.