Bihac was recorded for the first time as "Wyhugh" on 26th of February, 1260, in the Charter of Hungaro-Croation King Bela the Fourth. It was the fortress built at the insula of St. Ladislawus, as the property of Benedictine's Abbey. The Charter from 1271 certified that the town enjoyed the privileges of free royal municipality.

In the late 15th century Bihac found itself under strong threat by the Ottoman Empire, and it resisted to Ottoman attacks for more than hundred years. In year of 1592 Bihac fell under Ottoman rule and became important strongpoint of the most western province of the Empire, and the starting point for further advances north and west.

In 18th and 19th century, the strength of Ottoman Empire falls down and Bihac gets defensive role, finding itself under the siege more often.
Austro-Hungarian military units captured Bihac in September 1898. The walls of the fortress were destroyed in 1888 and new public and residential objects, built by European model, change the face and size of the town from traditional Bosnian to the city zones.

After disintegration of Austro-Hungarian Empire in 1918, Bihac and Bosnia-Herzegovina became part of The Kingdom of Serbs, Croats and the Slovenes, later called The Kingdom of Yugoslavia. In that period, Bihac was the regional centre in one of the Kingdom's counties.

Bihac was occupied by the axis forces in spring 1941 and becomes the part of so-called "Independent State of Croatia. Strong resistance movement emerged in the Bihac region from the first days of German occupation. Successful military actions performed by the partisan units resulted driving the Germans and their allies out of the town. Bihac becomes the capital of "Bihac Republic", one of the largest free territories in occupied Europe. After several heavy bombings, German forces captured Bihac again in 1943 until it was liberated by People's Liberation Army of Yugoslavia in 1945.

1945-1992 Bihac found itself in Socialist Republic of Bosnia and Herzegovina, which was federal unit of SFR Yugoslavia.

On the referendum held in March 1992 majority of the people of Bosnia and Herzegovina came out for independence, and this former Yugoslav republic, joined United Nations as its 177th member.

This act triggered the aggression on new independent state and one part of Bihac Municipality was occupied by the Bosnian Serb forces. The town itself was under the siege, suffering its hardest days in history for more than three years.

The war ended in November 1995 and Bihac becomes administrative centre of Una-Sana Canton, one of ten cantons in The Federation of Bosnia and Herzegovina, one of two state entities.