Main article: History of Penang

Archaeological evidence shows that Penang (island and its mainland territory) was inhabited by the Semang-Pangan of the Juru and Yen lineage, both now considered extinct cultures. They were hunter-gatherers of the Negrito stock having short stature and dark complexion, and were dispersed by the Malays as far back as 900 years ago. The last recorded aboriginal settlement in Penang was in the 1920s in Kubang Semang.^[8]
The history of modern Penang, originally part of the Malay Sultanate of Kedah, began when the island was leased to Captain Francis Light, an English trader-adventurer working for the Madras-based firm, Jourdain Sullivan and de Souza, in exchange for military protection from Siamese and Burmese armies who were threatening Kedah. On 11 August 1786, Francis Light landed on Penang at what is later called Fort Cornwallis and renamed the island Prince of Wales Island in honour of the heir to the British throne.^[9][10] In Malaysian history, the occasion marked the beginning of more than a century of British involvement in Malaya.
Unbeknownst to Sultan Abdullah of Kedah, Light had acted without the approval of the company when he promised military protection. When Light reneged on his promise, the Sultan tried to recapture the island in 1790. The attempt was unsuccessful, and the Sultan was forced to cede the island to the company for an honorarium of 6,000 Spanish dollars per annum. Light established Penang as a free port to entice traders away from nearby Dutch trading posts. He also encouraged immigrants by promising them as much land as they could clear. He reportedly fire silver dollars from his ship's cannons deep into the jungle to expedite the process. Many early settlers, including Light himself, succumbed to malaria, earning early Penang the epithet "the white man's grave".^[11][12]

The cenotaph at the Esplanade, erected after World War I, commemorates fallen soldiers

After Light's demise, Lieutenant-Colonel Arthur Wellesley arrived in Penang to coordinate the defences of the island. In 1800, Lieutenant-Governor Sir George Leith secured a strip of land across the channel as a buffer against attacks and named it Province Wellesley (Seberang Prai). The annual payment to Sultan of Kedah was increased to 10,000 Spanish dollars per annum after the acquisition. Today, the Penang state government still pays RM 18,800.00 to the Sultan of Kedah annually.^[9]
In 1826, Penang, along with Malacca and Singapore, became part of the Straits Settlements under the British administration in India, moving to direct British colonial rule in 1867. During the First World War, in the Battle of Penang, the German cruiser SMS Emden sank two allied warships off the coasts of George Town.^[13]
Penang suffered devastating aerial bombardments during World War II and finally fell to invading Japanese forces on 17 December 1941 as the British withdrew to Singapore after declaring George Town an open city.^[14] Penang under Japanese occupation was marked by widespread fear, hunger, and massacres which targeted the local Chinese populace.^[15][16]

Incorporated into	Date
Straits Settlements	1826
Crown Colony	1867
Japanese occupation	19 December 1941
Malayan Union	1 April 1946
Federation of Malaya	31 January 1948
Independence	31 August 1957
Malaysia	16 September 1963

The British returned at the end of the war and in 1946 Penang was reorganized into the Malayan Union, before becoming in 1948 a state of the Federation of Malaya which gained independence in 1957, and subsequently became part of Malaysia in 1963.^[9] Wong Pow Nee of the MCA party was Penang's first Chief Minister.^[17]
The island was a free port until 1969.^[18] Despite the revocation of the island's free-port status, from the 1970s to the late 1990s the state under the administration of Chief Minister Lim Chong Eu built up one of the largest electronics manufacturing bases in Asia, the Free Trade Zone in Bayan Lepas located at the southeastern part of the island.^[19]
The Indian Ocean tsunami which struck on Boxing Day of 2004 hit the western and northern coasts of Penang island, claiming 52 lives (out of 68 in Malaysia).^[20]

On 7 July 2008, George Town, the historic capital of Penang, was formally inscribed as a UNESCO World Heritage Site, alongside Malacca. It is officially recognized as having "a unique architectural and cultural townscape without parallel anywhere in East and Southeast Asia".^[21]