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Balinese people are descendants of a prehistoric race who migrated through mainland Asia to the Indonesian archipelago, presumably first settling around 2500 BC.
 

The end of the prehistoric period in Indonesia was marked by the arrival of Hindu people from India around 100 BC as determined by Brahmi inscriptions on potsherds. The name Balidwipa has been discovered from various inscriptions, including the Blanjong charter issued by Sri Kesari Warmadewa in 913 AD and mentioning Walidwipa. The Hindu Majapahit Empire (1293–1520 AD) on Eastern Java island founded a Balinese colony in 1343. The empire collapsed slightly before 1500 due to assaults, causing an exodus to Bali.

Europeans first discovered Bali when Dutch explorer Cornelis de Houtman arrived in 1597, though a Portuguese ship had foundered off the coast of Bukit as early as 1585. The Dutch soon established a trade post, and the Dutch East India Company (VOC) started trading from early 17th century. Dutch control of the island was firmly established after a series of colonial wars (1846–1849). These wars were so fierce (with the entire royal court of the Raja, women and children, plunged into battle armed with kris and spears, preferring to kill each other on the battlefield rather than be taken captive) that afterwards the Dutch governors exercised little influence over the island, generally allowing local control over religion and culture to remain intact.

After being conquered by Japan during World War II, and controlled Bali until August 1945. During the Japanese occupation a Balinese military officer, Gusti Ngurah Rai, began to gather a Balinese 'freedom army'. The Dutch returned immediately to reinstate their pre-war colonial administration. But now Balinese rebels were fighting them with Japanese weapons.

On 20 November 1946, the Battle of Marga was fought in Tabanan in central Bali. Colonel I Gusti Ngurah Rai, 29 years old, led his 95 guerrillas in a last-ditch battle in which all were killed by aerial bombardment-a reenactment of the 'puputans' of 40 years earlier. After a series of guerilla type confrontations which served to arouse the wrath of the Dutch, Ngurah Rai finally rallied his forces in east Bali at Marga Rana, where they made a suicide attack on the heavily armed Dutch. The Balinese battalion was entirely wiped out, breaking the last thread of Balinese military resistance.

In 1946 the Dutch constituted Bali as one of the 13 administrative districts of the newly proclaimed Republic of East Indonesia, a rival state to the Republic of Indonesia which was proclaimed and headed by Sukarno and Hatta. Bali became part of the Republic of the United States of Indonesia on Dec. 29, 1949. In 1956 Bali officially renounced the Dutch union and became legally a province within the Republic of Indonesia.

In 1965, after a failed coup d'etat in Jakarta against the national government of Indonesia, Bali was the scene of widespread killings of (often falsely accused) members and sympathizers of the Communist Party of Indonesia (PKI) by right-wing militias, along with several other parts of Indonesia, most notably Java. Possibly more than 100,000 Balinese were killed by the Indonesian military and associated militias, the exact numbers are unknown to date and the events remain legally remains unclosed[citation needed]. Until today many unmarked but well known mass graves of victims are located around the island.

On October 12, 2002, there was a car bomb attack in the tourist resort of Kuta, killing more than 200 people, mostly foreign tourists and injuring more than 500. Another series of terrorist bombings occurred nearly three years later at Kuta and nearby Jimbaran; see 2005 Bali bombings.

Another increasingly important source of income for Bali is what is called "Congress Tourism" from the frequent international conferences held on the island, especially after the terrorist bombings of 2002; ostensibly to resurrect Bali's damaged tourism industry as well as its tarnished image.