The Yuanmou Man, a Homo erectus fossil unearthed by railway engineers in the 1960s, has been declared as oldest known hominid fossil in China. There were human settlements in the area of Lake Dian during the Neolithic period,. These people used stone tools and constructed simple wooden structures.

During the 3rd century BC, the central area of Yunnan around present day Kunming was known as Dian. The Chu general Zhuang Qiao entered the region from the upper Yangtze River and named himself the "King of Dian". He and his followers brought an influx of Chinese influence into Yunnan, the start of a long history of migration and cultural expansion.

In 221 BC, Qin Shi Huang unified China and extended his authority in the south. Commanderies and counties were established in Yunnan. An existing road in Sichuan – the "Five Foot Way" – was extended south to present day Qujing (曲靖), in eastern Yunnan. In 109 BC, Emperor Wu sent General Guo Chang (郭昌) south to Yunnan, establishing Yizhou commandery and 24 subordinate counties. The commandery seat was in Dianchi county (present day Jinning 晋宁). Another county was called "Yunnan", probably the first use of the name. To expand the burgeoning trade with Myanmar and India, Emperor Wu also sent Tang Meng (唐蒙) to maintain and expand the Five Foot Way, renaming it "Southwest Barbarian Way" (西南夷道). By this time, agricultural technology in Yunnan had improved markedly. The local people used bronze tools, plows and kept a variety of livestock, including cattle, horses, sheep, goats, pigs and dogs. Anthropologists have determined that these people were related to the people now known as the Tai. They lived in tribal congregations, sometimes led by exiled Chinese.

During the Three Kingdoms, the territory of present day Yunnan, western Guizhou and southern Sichuan was collectively called Nanzhong. The dissolution of Chinese central authority led to increased autonomy for Yunnan and more power for the local tribal structures. In AD 225, the famed statesman Zhuge Liang led three columns into Yunnan to pacify the tribes. His seven captures of Meng Huo, a local magnate, are much celebrated in Chinese folklore.

In the 4th century, northern China was largely overrun by nomadic tribes from the north. In the 320s, the Cuan (爨) clan migrated to Yunnan. Cuan Chen (爨琛) named himself king and held authority over Lake Dian (then called Kunchuan [昆川]). Henceforth the Cuan clan ruled Yunnan for over four hundred years. In 738, the kingdom of Nanzhao was established in Yunnan by Piluoge (皮罗阁), who was confirmed by the imperial court of the Tang Dynasty as king of Yunnan. In 937, Duan Siping (段思平) overthrew the Nanzhao and established the Kingdom of Dali. The kingdom was conquered by the Mongol Empire in 1253. During the Yuan Dynasty Kublai Khan appointed the first governor, Turkmen Sayid Ajall, in Yunnan in 1273. Before that, the area had been ruled by a local king and a Mongol prince under the Great Khan. Yunnan and Hunan were main bases for Mongol military operations in Indo-China. The Ming Dynasty destroyed the Yuan loyalists in 1381 during the Ming conquest of Yunnan.

In 1894, George Ernest Morrison, an Australian correspondent for The Times, travelled from Beijing to British-occupied Myanmar via Yunnan. His book, An Australian in China, details his experiences.

Yunnan was transformed enormously by the events of the war against Japan, which caused many east coast refugees and industrial establishments to relocate to the province. It assumed great strategic significance, particularly as the Burma Road was constructed from Kunming to Lashio in Myanmar during this time.