Tarn Taran Sahib was first founded by Sri Guru Arjan Sahib Ji (1563–1606).

During the 1980s and early 1990s Tarn Taran Sahib was suggested as the capital of Khalistan, the proposed Sikh independent nation. The main industry in this area is agriculture and agro-industry, with few other opportunities.

Tarn Taran district was formed in 2006. The declaration to this effect was made by Captain Amarinder Singh, Ex-Chief Minister of Punjab, during the celebrations marking the martyrdom day of Sri Guru Arjan Sahib Ji. With this, it became the 19th district of Punjab.

There are 5 Historic Sikh Gurdwaras in Tarn Taran Sahib.

Gurdwara Sri Bibi Bhani Da Khooh is situated about 500 meters from Gurdwara Sri Darbar Sahib Tarn Taran. Bibi Bhani was the daughter of Sri Guru Amar Das Ji, the wife of Sri Guru Ram Das JI, and the mother of Sri Guru Arjan Sahib Ji. Bibi Bhani would serve food, water, and medicine to the lepers, the needy and visiting Sikhs at this location.