After Phayao was founded in 1096 it was a small city-state kingdom. In the 13th century it gained enough importance to be equal partner of King Mengrai of Lannathai and the Sukhothai kingdom. However a later king of Lannathai captured Phayao in 1338, and made it part of Lannathai. During the Burmese rulership of Lannathai the city became deserted, and in 1897 became part of the province Chiang Rai. Becoming effective on August 28, 1977 it was split off from Chiang Rai again, and became a province of its own.