Panajim or Panaji's history goes back to the Purta Dharmas - the charitable deeds of Gandagopal Kelima whose grandfather Kalapa was entrusted with the administration of Panajim by the Kadamba king, Shasthadeva (1007-1050), a good and a glorious king who "by his works redressed all the wrongs in his kingdom". This is gathered from an inscription of the Kadamba king, Vijayaditya I, dated February 7, 1107, and refers to Panajim as Pahajani Khali - Pahajani from which Panajim supposedly got its name and Khali probably refers to the creeks and backwaters abounding in the area. The first few Portuguese chroniclers, soon after the conquest of Goa, refer to Panajim as Panaji or Ponji which is said to mean "Land that never gets flooded". According to one Portuguese philologist, the word Pongy is derived from Panch Yma Afsumgary or five wonderful castles where the Muslim king, Ismail Adil Shah, and his wives used to live. Its name was later changed by the Portuguese into Panajim. When Old Goa collapsed in the 19th century, Panajim was elevated to the status of a city on 22nd March 1843 and was renamed `Nova-Goa' (New Goa). After liberation in 1961, it came to be known as Panajim.

Panajim originally was a neglected ward of Taleigao village. It was, in fact, a large coconut palm grove interspersed with ponds, backwaters, creeks, canals, sand dunes and paddy fields. The only conspicuous construction existing in the locality was the 15th century castle built by Adil Shah on the left margin of the Mandovi River.

On December 1, 1759, the Viceroy Dom Manuel de Saldanha de Albuquerque, Count Of Ega, shifted his residence from Panelim (near Old Goa) to Panajim. For this purpose, the old castle of Adil Shah was totally remodeled and a palace was built where, at present, the Government Secretariat stands. This has been the administrative and political seat of Government since then. It is here that the future of the State is decided and molded.