It was originally known as "Karhatak", which means elephant market. Karad is a historical city, according to epic Mahabharata, Sahadeva one of the Pandavas lived in the city also known to be pious as Lord Rama stepped his feet on this land. South west of town has Karad Caves.
Karad is also known for some Mughal-age architecture like the twin minarets of the Jama Masjid mosque that is located in the heart of the town. It was also meeting point of Haji holy pilgrim "Haj" in the Mughal period (1526–1857).
The first capital of the Shilaharas was probably at Karad during the reign of Jatiga-II as known from their copper plate grant of Miraj and Vikramankadevacharita of Bilhana. Hence sometimes they are referred as 'Shilaharas of Karad'. The capital was later shifted to Kolhapur. Among the Silaharas of Kolhapur who ruled over Satara and Belganv districts from 1000 to 1215 A. D., Gonka deserves mention here, as he is described as the Lord of Karhad (Karad), Mairifvja (Miraj) and Konkan.
In the period of HINDU-Muslim riots (1993, mumbai blast-babri demolition), karad was designated as 2nd most sensitive city in maharashtra, after mumbai.