A precursor to the bandura was the kobza, a three- to eight-string instrument mentioned in Greek literature of the 6th century. During the Middle Ages it was prominent in eastern European courts, where it was used to accompany singing and dancing. Additional strings were added to the kobza in the 14th or 15th century, when it became known as the bandura, but the term kobza remains a synonym for bandura. By the 15th century the bandura had been adopted by kobzari, professional musicians—many of whom were blind—who used the instrument as an accompaniment for epic ballads (dumy) that recounted the exploits of the Ukrainian Cossacks (Cossack). By the late 19th and early 20th centuries kobzari were persecuted for expressing nationalistic sentiments in their music, and in the 1930s Stalin ordered the execution of a number of them.

Despite Soviet censure, interest in the bandura increased in the 20th century. Many bandura ensembles and schools were formed, and the instrument, which was by tradition tuned diatonically, now has chromatically tuned versions. At the turn of the 21st century, bandura ensembles continued to be popular in Ukraine and in North American Ukrainian immigrant communities.