Hyderabad, also known as Neroonkot, is the capital and largest city of the Hyderabad Division in the Sindh province of Pakistan. It is the second-largest city in Sindh, after Karachi, and the 7th largest in Pakistan.

Founded in 1768 by Mian Ghulam Shah Kalhoro of the Kalhora Dynasty, Hyderabad served as a provincial capital until the British transferred the capital to Bombay Presidency in 1840. It is about 150 kilometres (93 mi) inland of Karachi, the largest city of Pakistan, to which it is connected by a direct railway and M-9 motorway.

The city was named in honour of Ali, the fourth caliph and cousin of Muhammad. Hyderabad's name translates literally as "Lion City"—from haydar, meaning "lion", and ābād, which is a suffix indicating a settlement. "Lion" references Ali's valour in battle. The city was historically known as Neroonkot, meaning the "place where Neroon came from", named after a local ruler called Neroon.

The River Indus was changing course around 1757, resulting in periodic floods of the then capital of the Kalhora dynasty, Khudabad. Mian Ghulam Shah Kalhoro decided to shift the capital away from Khudabad, and founded Hyderabad in 1768 over a limestone ridge on the eastern bank of the Indus River known as Ganjo Takkar, or "Bald Hill." The small hill is traditionally believed to have been the location of the ancient settlement of Neroon Kot, a town which had fallen to the armies of Muhammad Bin Qasim in 711 CE. When the foundations were laid, the city came to be known by the nickname Heart of the Mehran.

Devotees of Imam Ali advised Mian Ghulam Shah Kalhoro to name the city in honour of their Imam. The Shah of Iran later gifted the city a stone which purportedly bears the imprint of Ali's feet. The stone was placed in the Qadamgah Maula Ali, which then became a place of pilgrimage.

In 1768, Mian Ghulam Shah Kalhoro ordered a fort to be built on one of the three hills of Hyderabad to house and defend his people. The fort was built using baked clay bricks, earning it the name Pacco Qillo, meaning Strong Fort in Sindhi. The fort was completed in 1769, and is spread over 36 acres. Mian Ghulam Shah also built the "Shah Makki Fort", commonly known as Kacha Qila, to fortify the tomb of the Sufi saint Shah Makki.

Hyderabad remained the Kalhora capital during the period in which Sindh was united under their rule. Attracted by the security of the city, Hyderabad began to attract artisans and traders from throughout Sindh, thereby resulting in the decline of other rival trading centres such as Khudabad. A portion of the population of Khudabad migrated to the new capital, including Sonaras, Amils and Bhaibands. Those groups retained the term "Khudabadi" in the names of their communities as a marker of origin.

Mian Ghulam Shah died in 1772, and was succeeded by his son, Sarfraz Khan Kalhoro. In 1774, Sarfraz Khan built a "New" Khudabad north of Hala in memory of the old Kalhoro capital, and attempted to shift his capital there. The attempt failed, and Hyderabad continued to prosper while New Khudabad was abandoned by 1814. A formal plan for the city was laid out by Sarfraz Khan in 1782.