There is some disagreement over the proper etymology of the name "Arizona." The two most likely explanations are that it derives from an O'odham phrase ali sonak, "small spring," or that it derives from a Basque phrase aritz onak, "good oaks." The latter etymology is the one preferred by Arizona state historian Marshall Trimble, among other specialists. The name Arizonac was initially applied to the silver mining camp, and later (shortened to Arizona) to the entire territory.

Meeting its original native inhabitants, Marcos de Niza, a Franciscan, explored the area in 1539. Coronado's expedition entered the area in 1540–42 during its search for Cíbola. Father Kino developed a chain of missions and taught the Indians Christianity in Pimería Alta (now southern Arizona and northern Sonora) in the 1690s and early 1700s. Spain founded fortified towns (presidios) at Tubac in 1752 and Tucson in 1775. When Mexico achieved its independence from Spain in 1821, what is now Arizona became part of the Mexican State Nueva California, also known as Alta California. In the Mexican–American War (1847), the U.S. occupied Mexico City and forced the newly founded Mexican Republic to give up its northern territories, including the later Arizona. The Treaty of Guadalupe Hidalgo (1848) specified, that the U.S. would pay Mexico the sum of $15 Million US in compensation. In 1853 the land below the Gila River was acquired from Mexico in the Gadsden Purchase. Arizona was administered as part of the Territory of New Mexico until southern New Mexico seceded from the Union as the Confederate Territory of Arizona on March 16, 1861. This is the first official use of the name. A new Arizona Territory, consisting of the western half of New Mexico Territory was declared in Washington, D.C. on February 24, 1863. The new boundaries would later form the basis of the state.

Other names including "Gadsonia," "Pimeria," "Montezuma," "Arizuma," and "Arizonia" had been considered for the territory, however when President Lincoln signed the final bill, it read "Arizona", and the name became permanent. (Montezuma was not the Mexican Emperor, but the sacred name of a divine hero to the Pueblo people of the Gila valley, and was probably considered — and rejected — for its sentimental value, before the name "Arizona" was settled upon.)

Brigham Young sent Mormons to Arizona in the mid-to-late 19th century. They founded Mesa, Snowflake, Heber, Safford and other towns. They also settled in the Phoenix Valley (or "Valley of the Sun"), Tempe, Prescott, among other areas. The Mormons settled what became known as Northern Arizona and northern New Mexico, but these areas were located in a part of the former New Mexico Territory. The largest ancestry of these settlers is German American.

Arizona became a U.S. state on February 14, 1912. Arizona was the 48th state admitted into the U.S. and the last of the contiguous states admitted.

Cotton farming and copper mining, two of Arizona's most important statewide industries, suffered heavily during the Great Depression, but it was during the 1920s and 1930s that tourism began to be the important Arizona industry it is today. Dude ranches such as the K L Bar and Remuda in Wickenburg, along with the Flying V and Tanque Verde in Tucson, gave tourists the chance to experience the flavor and life of the "old West." Several upscale hotels and resorts opened during this period, some of which are still top tourist draws to this day; they include the Arizona Biltmore Hotel in central Phoenix (opened 1929) and the Wigwam Resort on the west side of the Phoenix area (opened 1936).

Arizona was the site of German and Italian prisoner of war camps during World War II. The Phoenix area site was purchased after the war by the Maytag family (of major home appliance fame), and is currently utilized as the Phoenix Zoo. A Japanese American internment camp was located on Mount Lemmon, just outside of the state's southeastern city of Tucson. Another POW camp was located near the Gila River in eastern Yuma County.

Arizona's population grew tremendously after World War II, in part because of the development of air conditioning, which made the intense summers more comfortable. According to the Arizona Blue Book (published by the Secretary of State's office each year), the state population in 1910 was 294,353. By 1970, it was 1,752,122. The percentage growth each decade averaged about 20% in the earlier decades and about 60% each decade thereafter.

The 1960s saw the establishment of retirement communities, special age-restricted subdivisions catering exclusively to the needs of senior citizens who wanted to escape the harsh winters of the Midwest and the Northeast. Sun City, established by developer Del Webb and opened in 1960 was one of the first such communities. Green Valley, south of Tucson, was another such community designed to be a retirement subdivision for Arizona's teachers. (Many of these senior citizens arrive in Arizona each winter and stay only during the winter months; they are referred to as snowbirds.)