Legend says that a Yadava ruler from 13th century built a small temple and water tank at the source of the river Krishna. The Valley of Jawali, the area around Mahabaleshwar, was ruled by the More clan who were vassals of the Adilshahi sultanate of Bijapur. In 1656, the founder of Maratha empire, Chhatrapati Shivaji, killed the then ruler of Valley of Jawali, Chandrarao More, and seized the area.Around that time Shivaji also built a hill fort near Mahabaleshwar called Pratapgad fort.
British colonial era
Map of the region 1881
Panchaganga temple in Old Mahabaleshwar, 1850s
In 1819, after the demise of the Maratha empire, the British ceded the hills around Mahabaleshwar to the vassal state of Satara. Colonel Lodwick Later General Sir Lodwick after climbing the mountains near Mahabaleshwar, recommended the place as a sanatorium for the British forces to governor Sir John Malcolm of Bombay presidency. The Raja of Satara was granted other villages in exchange for the British getting Mahabaleshwar in 1828. In old records Mahabaleshwar was even called Malcolm Peth after the governor.
Mahabaleshwar started gaining prominence when British officials of the Bombay presidency such as Sir Mountstuart Elphinstone, Arthur Malet for whom the seat at Point Arthur is named, Carnac, and many others became regular visitors. Venna Lake was constructed in 1842 to collect water from perennial springs; the Venna River flows from this lake. Bartley Frere, the commissioner of Satara in the 1850s, built the road from Satara to Mahabaleshwar. In the mid 1800s, Mahabaleshwar was made into the summer capital of the Bombay presidency. Government spending led to rapid development of the area.
Colonial officials spent part of their year in the area. Their wives spent a longer period of the year in the area to be with their children in local boarding schools in Mahabaleshwar and nearby Panchgani. The British rulers wanted to recreate the English landscape in the hill stations and to that end, European flora such as strawberries were introduced in Mahabaleshwar, and amenities such as libraries, theatres, boating lakes, and sports grounds were constructed.

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