After the partition of British India into the two nations of India and Pakistan in 1947, the region of Punjab was also split between India and Pakistan. The Indian state of Punjab required a new capital city to replace Lahore, which became part of Pakistan during the partition. After several plans to make additions to existing cities were found to be infeasible for various reasons, the decision to construct a new and planned city was undertaken.

Of all the new town schemes in independent India, the Chandigarh project quickly assumed prime significance, because of the city's strategic location as well as Jawaharlal Nehru's (the first Prime Minister of independent India) personal interest in it. Commissioned by Nehru to reflect the new nation's modern, progressive outlook, Nehru famously proclaimed Chandigarh to be "unfettered by the traditions of the past, a symbol of the nation's faith in the future." Several buildings and layouts in Chandigarh were designed by the Swiss-born French architect and planner, Le Corbusier in the 1950s. Le Corbusier was in fact the second architect of the city, after the initial master plan was prepared by the American architect-planner Albert Mayer who was working with the Polish-born architect Matthew Nowicki. It was only after Nowicki's untimely death in 1950 that Le Corbusier was pulled into the project.

On 1 November 1966, the newly-formed Indian state of Haryana was carved out of the eastern portion of the Punjab, in order to create Haryana as a majority Hindi speaking state, while the western portion of Punjab retained a mostly Punjabi-speaking majority and remained as the current day Punjab. However, the city of Chandigarh was on the border, and was thus created into a union territory to serve as capital of both these states. Chandigarh was due to be transferred to Punjab in 1986, in accordance with an agreement signed in August 1985 by Rajiv Gandhi, the Prime Minister of India at that time, with Sant Harchand Singh Longowal of the Akali Dal. This was to be accompanied by the creation of a new capital for Haryana, but the transfer has been delayed pending an agreement on which parts of the Hindi speaking areas of Abohar and Fazilka, currently part of Firozpur District of Punjab, should be transferred to Haryana in exchange.

On 15 July 2007,Chandigarh became the first Indian city to go smoke free.

The other planned cities in India: Lutyens's New Delhi, Bhubaneshwar in Orissa, Gandhinagar in Gujrat and Navi Mumbai in Maharashtra, were built close to existing old cities (Delhi, Cuttack, Ahmedabad and Mumbai respectively).