After a lifetime of exploits and guerrilla warfare with Adilshah of Bijapur and Moghul emperor Aurangzeb, the local lord Shivaji founded an independent Maratha nation in 1674, with Raigad as its capital. Shivaji died in 1680, leaving a large, but vulnerably located kingdom. The Mughals invaded, fighting an unsuccessful 25 years long war from 1682 to 1707. Shahu, a grandson of Shivaji, ruled as emperor until 1749. During his reign, Shahu appointed a Peshwa ( prime minister) as head of government under certain conditions. After the death of Shahu, the Peshwas became the de facto leaders of the Empire from 1749 to 1761, while Shivaji's successors continued as nominal rules from their base in Satara. Covering a large part of the subcontinent, the Maratha Empire kept the British forces at bay during the eighteenth century, until dissension between the Peshwas and their sardars, or army commanders, tore at their cohesion.

The Maratha Empire was at its height in the eighteenth century, under Shahu and the Peshwa Baji Rao I. Losses at the Third Battle of Panipat, in 1761, suspended further expansion of the empire and reduced the power of the Peshwas. In 1761, after severe losses in the Panipat war, the Peshwas lost control of the Kingdom. Many sardars like, Shinde, Holkar, Gayakwad, PantPratinidhi, Bhosale of Nagpur, Pandit of Bhor, Patwardhan, and Newalkar became kings in their respective regions. The empire gave way to a loose Confederacy, with political power resting in a "pentarchy" of five mostly Maratha dynasties: The Peshwas of Pune; the Sindhias (originally "Shindes") of Malwa and Gwalior; the Holkars of Indore; the Bhonsles of Nagpur; and the Gaekwads of Baroda. A rivalry between the Sindhia and Holkar dominated the confederation's affairs into the early nineteenth century, as did the clashes with the British and the British East India Company in the three Anglo-Maratha Wars. In the Third Anglo-Maratha War, the last Peshwa, Baji Rao II, was defeated by the British in 1818. Most of the former Maratha Empire was absorbed by British India, although some of the Maratha states persisted as quasi-independent princely states until India became independent in 1947.