Abū Ẓaby fronts the Persian Gulf on the north for about 280 miles (450 km). The desolate coast has many areas of sabkhah (“salt marsh”) and numerous offshore islands. Abū Ẓaby borders Qatar (west), Saudi Arabia (south), and Oman, formerly Muscat and Oman (east). Internally it half surrounds Dubayy and has a short frontier with Al-Shāriqah (Shāriqah, Al-).

Since the 18th century the Āl bū Falāh clan of the Banū Yās has been in power; their earliest seat was in the Līwā (Al-Jiwāʾ) oasis district. In 1761 they found wells of potable water at the site of Abu Dhabi town on the coast, and they made their headquarters there from 1795. Because Abū Ẓaby's traditional rivals were the Qawāsim pirates of Raʾs al-Khaymah and Al-Shāriqah sheikhdoms and because the pirates were hostile to the sultanate of Muscat and Oman, Abū Ẓaby's rulers at first allied themselves with the sultanate. In the 19th century, however, territorial conflicts developed between Abū Ẓaby, Muscat and Oman, and the expanding power of the Wahhābī of Najd, ancestors of the present ruling dynasty of Saudi Arabia. These conflicts led to border disputes, most still unsettled.

Though not considered a pirate state, Abū Ẓaby signed the British-sponsored General Treaty of Peace (1820), the maritime truce (1835), and the Perpetual Maritime Truce (1853). By the terms of the Exclusive Agreement of 1892, its foreign affairs were placed under British control. During the long rule of Sheikh Zayd ibn Khalīfah (1855–1908), Abū Ẓaby was the premier power of the Trucial Coast, but in the early 20th century it was outpaced by Al-Shāriqah and Dubayy. When Britain proposed withdrawal from the Persian Gulf (1968), Abū Ẓaby, together with the other Trucial States, Bahrain, and Qatar, negotiated to form a nine-member federation. The latter two states, however, became separately independent (1971); Britain abrogated its earlier treaties with the Trucial States, and the new United Arab Emirates, of which Abū Ẓaby is a leading member, came into being. Abu Dhabi was made the provisional capital of the United Arab Emirates for five years; its status was extended several times until it was made the permanent national capital in the early 1990s.

Abū Ẓaby's economic base rests heavily on crude-oil production. petroleum was discovered in 1958 at the submarine field of Umm al-Shayf, located offshore at a depth of almost 9,000 feet (2,750 metres). This oil is pumped through a submarine pipeline to the previously desolate Dās island, about 20 miles (32 km) west, where the emirate's main offshore tanker terminal was built, with airstrip, gas-liquefaction plant, and ancillary facilities; exports began in 1962. Principal onshore production is from the Murbān and Bū Ḥaṣā fields, the centres of which are in the central part of the state, 25 to 40 miles (40 to 65 km) from the coast. Pipelines connect these with a coastal terminal to the northwest at Jabal Al-Ẓannah (Mount Dhanna). Other offshore fields are at the Ruqq Al-Zukum (Zukum shoal, northwest of Abu Dhabi) and connected by submarine pipeline to Dās island, and at Umm al-Dalkh, north of Abu Dhabi. The state's total oil reserves are estimated to be about one-tenth of the world's total reserves.

Abū Ẓaby's combined revenues from oil royalties and overseas investments give it one of the world's highest per capita incomes, which has allowed for a series of ventures concentrating on large-scale construction projects and cultural development. At the beginning of the 21st century, Abū Ẓaby concentrated on creating a network of world-class cultural centres to promote tourism and to entice and retain residents. Among these, plans to develop a 10-square-mile (27-square-km) island as a culture and tourism hub with a number of museums (including a branch of New York City's Guggenheim Museum) were marked by a controversial deal with the French government, which, in addition to providing expertise and lending its works, agreed to loan the Louvre (Louvre Museum) name to one of the island's nascent art museums for a period of 30 years. Despite provoking a great deal of debate, the arrangement underscored the emirate's growing determination to draw and foster an international cultural focus.

In addition to internal development, Abū Ẓaby has lent some of its wealth to its less-prosperous sister states in the United Arab Emirates, to other countries in the Arab world, and to developing countries elsewhere. An Arid Lands Research Centre was founded at Al-ʿAyn (Ayn, Al-ʿ) in the interior to seek improved methods of vegetable growing. Abū Ẓaby also has a number of terrestrial and marine wildlife research centres.

Abū Ẓaby is served by the Abū Ẓaby International Airport, which underwent significant expansion in the early 21st century; Port Zāyid is a major shipping centre and the emirate's main cargo port. There are a number of universities within the emirate, among them United Arab Emirates University (1976) and Abu Dhabi University (2003), as well as a branch of the Sorbonne (2006), which offers French-language courses designed to conform to the academic standards of the Sorbonne in Paris. Area 28,210 square miles (73,060 square km). Pop. (2005 est.) 1,292,119.