The župa of Gradačac was first mentioned in 1302, while the town's first written mention dates from 1465 (also as Gračac). The town became part of the Ottoman Empire in 1512, its nahija (municipality) was first recorded in the defter of 1533, while its kadiluk (county) was recorded in 1634.

In 1701 the settlement was given the status of a palanka (city), and it became the headquarters of a military captaincy in 1710. The captains of the Gradaščević family led the development of the city, and the most famous of them, Husein-kapetan Gradaščević or Zmaj od Bosne ("Dragon of Bosnia"), led an uprising that raised to arms most of the Bosnian captains in 1831.

The castle of Gradačac

The town has a fort with 18-meter high walls built between 1765 and 1821, and a 22-meter high watchtower, built in 1824 by the Ottoman empire on foundations made originally by the Romans.

During World War II, Gradačac was part of the Nazi-controlled Independent State of Croatia (i.e., the NDH).

According to the 1910 population census, the majority in the district was held by Orthodox Serbs - 35.90%.

It was severely bombed during the Bosnian war 1992-1995. It is located at the narrow northern corridor that connects two major portions of the Bosnian Serb entity Republika Srpska, near Brčko. Gradačac became part of the Tuzla Canton in the Federation of Bosnia and Herzegovina after the war.