Budapest stood apart from the relatively drab capitals of the other Soviet-bloc countries; it maintained an impression of plenty, with smart shops, good restaurants, and other amenities. The dissolution of the Soviet bloc and Hungary's transition away from socialism brought Budapest new opportunities for prosperity and an influx of Western tourists—along with the stresses of economic transition to a more Western-style economy. Area city, 203 square miles (525 square km). Pop. (2005 est.) 1,697,343.

Strategically placed at the centre of the Carpathian Basin, Budapest lies on an ancient route linking the hills of Transdanubia (Hungarian: Dunántúl) with the Great Alfold (Great Hungarian Plain; Hungarian: Nagy Magyar Alföld). The wide Danube (Danube River) was always fordable at this point because of a few islands in the middle of the river. The city has marked topographical contrasts: Buda is built on the higher river terraces and hills of the western side, while the considerably larger Pest spreads out on a flat and featureless sand plain on the river's opposite bank.

The climate of Budapest is transitional between the extreme conditions of the Great Alfold and the more temperate climate of Transdanubia, with its abundant rainfall. Mean annual temperature is 52° F (11° C), ranging from a July average of 72° F (22° C) to 30° F (-1° C) in January. Mean annual precipitation is 24 inches (600 millimetres). Winter snowfalls can be heavy, and the temperature may fall below 5° F (−15° C), but, on the other hand, heat waves combined with humidity in the summer can make the air oppressive. Flooding in Pest was endemic before the river was regulated in the 19th century. The Danube (blue only in the Johann Strauss waltz) has become heavily contaminated, and air pollution, from which the inhabitants of Buda have largely been able to escape, has afflicted most districts in Pest.

Buda was the kernel of settlement in the Middle Ages, and the cobbled streets and Gothic houses of the castle town have preserved its old layout. Until the late 18th century, Pest remained a tiny enclave, but then its population exploded, leaving Buda far behind. In the latter half of the 20th century, growth has been more evenly distributed between the two parts. Contemporary Budapest covers 203 square miles (525 square kilometres), of which about half is built up. Buda's hilltops, still crowned by trees; the Danube flanked by three lower hills; the bridges; Margit (Margaret) Island; and the riverfront of Pest lend a remarkable visual identity to the city.

Below the three hills stretches the city. Opposite Rózsa Hill lies Margit Island, a mile-long park with hotels and swimming pools. Facing Castle Hill on the Pest side of the Danube is the ornate Parliament Building (Országház). Designed in Neo-Gothic style and influenced by the Houses of Parliament in London, the building (completed in 1902) has been little used since the end of World War II. Further along the bank lies the Neo-Renaissance building of the Hungarian Academy of Sciences (1862–64); the Vigadó, a large hall built in the Romantic style (1859–64); and two obtrusive modern hotels.

The heart of Pest is the Belváros (Inner Town), an irregular pentagon with its longest side running parallel to the Danube; only traces of the original town walls remain. The district accommodates offices, parts of the Loránd Eötvös University, and shops. The Váci utca, a narrow street turned pedestrian thoroughfare, is the most fashionable shopping centre of Budapest. The Town Hall (Fővárosi Tanács), a Baroque building erected between 1724 and 1747, is in the northeast corner of the Belváros next to Pest County Hall (Pest megyei Tanács). The Inner Town Parish Church (Belvárosi plébániatemplom) is the oldest building in Pest. Rebuilt in the Baroque style in the 18th century, as were many other churches in Pest and Buda, the church had been the most impressive of medieval Pest. St. Stephen's Crown (Saint Stephen's Crown), the symbol of Hungarian nationhood, is on display in the Hungarian National Museum, a Neoclassical edifice located just outside the Belváros.

The finest thoroughfare in Budapest, Andrássy Avenue, runs in a straight line from the centre of Pest to City Park (Városliget), which contains the Millennium Monument. The monument consists of a semicircular pillared colonnade displaying statues of Hungarian kings and national leaders, with a statue of the archangel Gabriel surmounting a 118-foot-high central column. The Museum of Fine Arts, other museums, the Budapest Zoo, the renowned city circus, and an amusement ground (which was once called the “English Park”) are all found nearby.

The capital is almost 10 times larger than Hungary's next largest city. The rise of population has been phenomenal: its rate of increase from about 100,000 in the 1840s to 1,000,000 in 1918, for example, far outstripped that of London during the same period. Natural population growth has never been a factor in this expansion. Rather, more die in the city than are born there, the result of a never-ending migration of people from villages and towns to the capital. By the late 20th century, however, the rate of growth had slowed, and the population had begun to shift from the central districts to the periphery and adjacent communities. Residential districts—such as Pesterzsébet (Pestszenterzsébet) and Kelenföld in the south, Rákoskeresztúr in the east, and Óbuda, Békásmegyer, and Újpalota in the north—have been growing as the inner city has been redeveloped.

Always a city of marked social divisions, Budapest once revealed the deep-rooted contrast in lifestyle between the aristocrats, who built palaces in the town centre, and those who lived in the slum districts and sprawling temporary barrack settlements on the city's perimeter. During the Stalinist period after World War II, these contrasts largely disappeared, but an acute housing shortage has persisted. The majority of the inhabitants continue to live in relatively small flats. Economic reforms since the late 1960s have created new wealth, which, in turn, has sharpened the differences between the more ostentatious lifestyle of the new middle classes—whose privileged members are able to build second homes in the Buda Hills and on Lake Balaton—and that of the workers who populate the gigantic, faceless housing estates of the drab outlying residential districts.

The capital, apart from its large number of foreign visitors, is entirely Hungarian-speaking; in the past it never was. The remarkably diverse ethnic background of Budapest's population has been one of the city's greatest strengths. In the past Buda was run by German and later German and Hungarian burghers. In the early 19th century the government of Pest was in the hands of German burghers, shipping was controlled by Serbs, and the merchants were largely “Greek” (i.e., Greek and other Balkan peoples). German-speaking industrial workers were brought in from the west, and large numbers of Jews moved in from the east. By 1900 nearly one-fourth of the inhabitants of Budapest were Jewish, but the Jewish community was largely destroyed during World War II. Postwar Budapest has become culturally homogeneous.

Developed from early times to be the true centre of the country's economy, the town was originally self-sufficient in food production. Buda's wine was renowned before Phylloxera (a genus of plant louse) and urban expansion destroyed the vineyards that once covered the higher river terraces of the Danube. Today the rest of Hungary supplies its capital with food, to which the orchards, gardens and nurseries, and dairy farms of the Buda Hills contribute only a small fraction.

In the past, all roads converged on Buda, and its market was always famous. By the 19th century, however, commerce had shifted to Pest; its wealthy merchants dominated Hungary's agricultural market, and its banks (by 1900 more than 100) controlled 60 percent of the country's bank capital. Commerce is still concentrated in Pest's Belváros, including the major banks, most of the foreign trading companies, the state travel agency (Idegenforgalmi, Beszerzési, Utazási és Szállítási R.T., or IBUSZ), and the best shops. To help mitigate the growing imbalance in consumer services, large shopping centres have been built in Óbuda, Lágymányos, Újpest, Zugló, and elsewhere. The national economic reforms introduced since 1968 have created a private sector in retailing and in service industries. Both the public and the private sectors have benefited from the increasingly important tourist industry.

In the last quarter of the 19th century, the city—which possessed neither local raw materials of any sort nor even skilled workers (they had to be imported from Austria and Moravia)—was transformed from a commercial base to the country's most prominent industrial centre. Except for a few engineering factories, manufacturing was at first limited to the processing of raw materials, particularly food, and huge grain mills were built on the Danube. Primary-metal and engineering works (especially for agricultural machinery and ships) and munitions and electronics factories soon followed. Automobiles have been produced since 1905, but light industries grew fast only after World War I. Possessing the bulk of the country's industrial production and by 1938 about three-fifths of its factory workers, Budapest strangled the economic growth of all of Hungary's other towns. The city's location on the Danube and especially the construction of the rigidly centralized Hungarian railways, which had preceded the growth of industry, were instrumental in this dominance. The influx of foreign capital, channeled through the large banks and through the government, and the control of large factories by leading Budapest banks reinforced the centralizing role played by the transport system. The loss of two-thirds of Hungary's territory in 1918 and the directives of a centrally planned economy that existed from 1945 until the late 1980s exacerbated the hypertrophy of Budapest in relation to the rest of the country, although by 1969 the capital's share of the country's industrial workforce had been reduced to about one-half. More than half the factory workers in Budapest are employed in heavy industry; the rest are divided between light industry and food processing.

Horse-drawn trams were introduced in 1866; and, after the first electric tramways were built in 1887, they soon expanded into a large network. The trams and buses (the latter introduced in 1915) met local transport needs before the 1940s, but they could not cope with the rapid growth of traffic after World War II. Yet, despite the congestion caused by the colossal expansion in the use of the private automobile and the reduction in the number of tramcars, city transport has once more become efficient. The Metro, a subway system constructed in the 1970s, operates three lines, including one that runs under the river and connects Buda to Pest; it is a showpiece that is clean, fast, and (like the city's buses and old-fashioned rattling trams) absurdly cheap.

The hills of Buda, with their pleasant wooded paths, can be reached easily from the town either by an old cog railway, bus, or a chairlift that takes sightseers to the top of János Hill, which, at 1,729 feet (527 metres) above sea level, is the highest point in Budapest. The Children's Railway (Gyermekvasút), which winds through the hills, is managed largely by children.

Budapest is the seat of the Hungarian government; it is also the seat of Pest megye (county) and Buda járás (district). The city is divided into 23 administrative districts—6 on the Buda side, 16 in Pest, and Csepel Island—each with its own government and mayor, though Budapest also has a chief mayor. Control of the city is formally vested in the Budapest Metropolitan Council (elected by the district councillors who in turn are elected by the whole adult population), to which the Management Committee (Végrehajtóbizottság) is responsible.

The city has a tradition of good public services, at least in the centre (gas was introduced there for private consumers in 1856 and electricity in 1893), as evidenced by the improvements in public transport and the renovation of the telephone system undertaken in the 1970s. Although the police have been known to be rude and act arbitrarily, they are not overworked, even as crime, prostitution, and the use of drugs (as well as alcohol) are acute problems. Hospital care and other social services are adequate—particularly in the city centre. Suicide figures are alarmingly high in Budapest, where the most pressing social problem has continued to be the shortage of decent housing.

The economic hypertrophy of Budapest is compounded by its dominating position in Hungarian culture. Radio and television broadcasting and the film industry are the preserve of the capital, and publishing and the press are nearly so. Writers and poets, traditionally said to be excessively preoccupied with rural life and the peasantry, have nevertheless been drawn to Budapest, as have Hungary's composers: Ferenc Erkel (Erkel, Ferenc), Ernst von Dohnányi (Dohnányi, Ernst von), Béla Bartók (Bartók, Béla), and Zoltán Kodály (Kodály, Zoltán) all lived in the capital. The leading grammar schools are concentrated in Budapest, and its universities and colleges attract most of the country's best students. Furthermore, the Hungarian Academy of Sciences and the great majority of its research institutes are in Budapest.

The city also claims the best libraries, museums, art galleries, orchestras, sports facilities, and theatres in Hungary. The music academy, established in 1875 by the pianist and composer Franz Liszt (Liszt, Franz), has acquired international fame. The Opera House was restored to its 19th-century splendour in 1984. The National Theatre, on the other hand, has been awaiting permanent accommodation since it left its building in 1964.

Budapest has more than its share of bookshops; an unparalleled number of hairdressing salons and swimming pools (sometimes the two are combined); and a large variety of thermal baths, including Császár, Lukács, Rác, Király, Rudas, Gellért (all on the Buda side) and Széchenyi and Dagály (in Pest). There are numerous underground hot springs that contain radium and other minerals, and, since Roman times, bathers have sought them out for their supposed healing properties.

Budapest's location is a prime site for habitation because of its geography, and there is ample evidence of human settlement on the Danube's western side from Neolithic times onward. Two miles north of Castle Hill, in what became Óbuda, a settlement named Ak-Ink (“Ample Water”) was established by the Celtic Eravisci. This became Aquincum when the Romans established a military camp and civilian town there at the end of the 1st century AD. Becoming the seat of the province Pannonia Inferior (c. AD 106) and then acquiring the status of a municipium (124) and finally a full colony (194), Aquincum grew into a thriving urban centre with two amphitheatres. After the collapse of Roman authority in Pannonia in the early 5th century, some of the large buildings were inhabited by Huns and later by Visigoths and Avars, each group controlling the region for a while.

Kurszán, the Magyar tribal chieftain, probably took up residence in the palace of the former Roman governor at the end of the 9th century. The settlement shifted south to Castle Hill some time after Stephen I of Hungary had established a Christian kingdom in the early 11th century. Buda, for whom the settlement was named, was probably the first constable of the new fortress built on Castle Hill, and the old site to the north became known as Óbuda (“Old Buda”). On the opposite side of the river, a Slavonic settlement, Pest (meaning “Lime Kiln,” which is also suggested by Ofen, the German name for Buda), was already in existence.

Medieval Buda prospered and declined along with its patron, the Hungarian royal court. The municipality was established by royal charter in 1244, by Béla IV. He bestowed on the citizens of Pest, whose town had been devastated by the Mongols in 1241, the right to settle in full possession of their privileges in the fortified castle. The town administration, based on German law, had been dominated by German burghers before it became reorganized in 1439. At that time, parity status was conferred on the Hungarians in municipal government. Buda's preeminence, developed under royal protection, was underlined by its judicial authority (as a higher court) over other free royal towns, although the proximity of the king's court undermined its own self-government. The palace was rebuilt by Matthias I, whose death in 1490 marked the decline of both royal power and the town. The Turks held Buda between 1541 and 1686. After a devastating siege it was liberated by a Christian army organized by the Holy Roman emperor Leopold I. Little of Matthias' Buda survived into the 18th century.

Both Buda and Pest were recognized by Leopold I as royal free towns in 1703, while Óbuda, a village, belonged to Pest megye, the autonomous county that was in the hands of the local Hungarian nobility. In 1720 Buda and Óbuda had a combined population of about 9,600, while that of Pest was only 2,600; but by 1799 Buda had some 24,300 inhabitants to Pest's 29,870, demonstrating that the balance in the size of the two townships had shifted.

Pest, a German commercial centre in Hungary and by then part of the Habsburg (Habsburg, House of) empire of Austria, had begun to grow in the late 18th century. Buda, where in the early 18th century only German Roman Catholics were allowed to settle, remained an imperial garrison town and developed once more under the eye of the monarch. A new royal palace was built in the 1760s during the reign of Maria Theresa. The university was moved from Nagyszombat (modern Trnava, Slovakia) to Buda in 1777; since 1949 it has been called Loránd Eötvös University. In 1783 Joseph II turned Buda into the country's administrative centre; that same year the Curia (High Court) was moved to Buda, and the university was transferred to Pest. For centuries floods were a serious problem, and one in 1838 took a particularly heavy toll: more than half the houses in Pest were destroyed, and Buda suffered as well.

The character of Buda under the Habsburgs remained aristocratic and distinctly alien. Pest, into which the gentry and intelligentsia moved, became wedded to the national cause; the Széchenyi Chain Bridge, linking Buda with Pest, was a metaphor for unity. The town of Pest was still partly German, but the nobility of Pest megye led the campaign for Hungarian home rule. After the outbreak of revolution in Pest in March 1848, a Hungarian ministry, transferred from Pozsony (modern Bratislava, Slovakia) and responsible to the Diet, was established there. In the ensuing civil war Buda was besieged in May 1849 by the revolutionary army of the patriot Lajos Kossuth (Kossuth, Lajos). Repression followed the revolution until 1867, when the country, which became Austria-Hungary the following year, was placed under the Dual Monarchy. Governments were established in Vienna and Pest.

“Buda-Pest” was created in 1872 when Pest, Buda, and Óbuda were united into a single municipal borough comprising 10 districts. Within a year, however, the hyphen had disappeared from the name of the new capital, even in official documents. Between 1873, when the law promulgating the unification went into effect, and the communist takeover after World War II, Budapest enjoyed self-government.

Its governing body, the City Council, consisted of 400 members elected by the districts. The influence of wealth was ensured by a provision of the law (Prussian in origin) that half the council was to be elected from among the 1,200 highest taxpayers of the capital (the so-called virilists), while the other half of the council's membership was elected from the rest of the electorate, based on a rather narrow franchise. Property owners thus played an important role in the government of the city: aristocrats, grain and wine merchants, German burghers, a few solicitors, builders and architects, and later bankers and industrialists all went into real estate and became virilists.

Budapest dominated national politics. The Belváros was the constituency of Ferenc Deák (Deák, Ferenc), the creator of the Dual Monarchy system. After his death in 1876 the constituency was inherited by leading politicians.

Explosive urban and industrial growth created social tension and the emergence of a working-class movement before World War I. After the disintegration of Austria-Hungary in the autumn of 1918, the National Council, a revolutionary body headed by Count Mihály Károlyi (Károlyi, Mihály, Count) and supported by antiwar radicals and socialists, took power in Budapest. The following March the Károlyi regime collapsed; communists seized power in the capital and held it for four months while also controlling the central regions of the country. Romanian troops occupied and sacked Budapest before the old social order was restored by a counterrevolutionary army marching into the bűnös város (“sinful town”) in November 1919.

After the signing of the Treaty of Trianon (Trianon, Treaty of) in 1920, Budapest—now the capital of an independent Hungary—became disproportionately large compared to the rest of the country. Social conditions deteriorated in the interwar years. Buda Castle, where Miklós Horthy (Horthy, Miklós), the country's regent, resided after 1920, played a fateful role in World War II. Hungary, a satellite of Germany in the war, was occupied by the German army in March 1944. In October Horthy sued for a separate peace and renounced the German alliance, but the coup failed. Between the end of December and the middle of February 1945, German army units put up a fierce resistance to the Soviet advance. In the process, the fighting reduced Castle Hill to a large, sprawling ruin; more than a quarter of the city's buildings and factories were destroyed or damaged, and all the bridges were blown up. It took years for the town to recover from this devastation, but, as the centre of a planned economic system, Budapest resumed its rapid growth in the postwar years.

During the 1990s Budapest underwent dramatic change as the city made the transition from a closed to an open society. Budapest's long-defunct stock exchange reopened and became an important market in central Europe; the city's breathtaking architecture and cultural landmarks made it a popular tourist destination; and the Hungarian government's privatization program transferred most industries and businesses from state control to the private sector and attracted significant foreign investment. Despite its long experience with communist rule, by the beginning of the 21st century Budapest had emerged once again as one of Europe's most vibrant cities.