In ancient times Kohala was a centre of Hindu pilgrimage who worshipped Kohala Devi. By the middle of 500 BCE Kohala had become a centre of the Buddhist community and a temple was constructed between Kohala and Knair Pull. It was a route of Buddhist monks for travelling from Taxila to Sharda Buddhist university in Sharda, Kashmir.
Kohala was possessed by the Karlal tribe in the mid eighteenth century and in 1200 when the Dhond Abbasi tribe attacked, they vacated Bakot and Kohala also. From this time Kohala was under the proprietorship of Birote. When the Mojwal family of the Dhond Abbasi tribe migrated to Bakote by force, the Kohala proprietorship transferred to Mojwals of Bakote.
In the first decade of 1800, Malka Singh, administrator of Rawalpindi captured Kohala by force. In 1814 Malka Singh and the Dogra government of Kashmir under Gulab Singh developed the area as a business centre for Hindu merchants.
In 1863 Sir James Abbott, the first commissioner of Hazara, changed the name of the area from Patan (the old name) to Kohala.
The British government transferred the administration of Kohala to Murree on a one hundred-year lease in 1873. The Punjab government renewed this lease in 1973 for 20 years and it was reunited with Bakote in 1993.
The government of British India built a rest house in the south of Kohala for high officials with seven drying rooms, two kitchens, one reading room, two toilets and horse and dog barns. The Indian olive, banana, apple and silkworm trees were in the guest house's eastern lawn. Guest house staff consisted of 30 people. A telegraph office (later a post office) was established there in 1880. Allama Iqbal (Poet of the East) staying in this rest house in 1930 and wrote his famous poem "Hammala", the 1st poem of his book Bang-e-Dra here. The bazaar of Kohala was most populated until 1947. Hindu merchants from Dewal, Murree, Rawalpindi and Punch controlled trade between Punjab and Kashmir.
In 1947 during the independence of Pakistan Kohala joined Pakistan.