The city was founded by Samuel Baker, the explorer of Lake Albert and the upper Nile in 1846. Nuwara Eliya's climate lent itself to becoming the prime sanctuary of the British civil servants and planters in Ceylon. Nuwara Eliya, called Little England, was a hill country retreat where the British colonialists could immerse themselves in their pastimes such as fox hunting, deer hunting, elephant hunting, polo, golf and cricket.

Many of the buildings retain features from the colonial period such as the Queen's Cottage, General's House, Grand Hotel, Hill Club, St Andrew's Hotel and Town Post Office. New hotels are often built and furnished in the colonial style. Visitors to the city can wallow in its nostalgia of bygone days by visiting the landmark buildings. Many private homes maintain their old English-style lawns and gardens.