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There are various sources tracing the origins of the city of Sialkot but the authenticity of many of these sources varies. Excavations throughout the area have revealed large amounts of Greek coins, ancient Zoroastrian temples and several Buddhist stupas. The antiquities of Sialkot have also been discussed by Sir Alexander Cunningham in his Archaeological Survey Reports, II, 21, 22, and XIV, 44 to 47.

According to Hindu mythological scriptures, Sialkot is believed to have been founded by Raja (King) Sul or (Shalya), emperor of Madradesa and brother of Madri, second wife of emperor Pandu and mother to Nakul and Sahadeva. He was the uncle of the Pandavas, whose heroic deeds are recorded in the epic Mahabharata. During the Mahabharata period,[1] Sialkot's name was Sakala or Sagala. After the death of Raja Sul, some 5000 years ago, there is a tradition that the dynasty continued for some 1500 years. The seasonal stream, known as the Aik Nala, that still flows through the city, has been mentioned in the Upanishads. In the late Vedic period (c. 1500 - c. 200 B.C.), Sakala (Sialkot) was the capital of the Madras (Brihadaranyaka Upanishad). Sakaladvipa (island of Sakala) was the name of the doáb (land lying between two rivers) between Chandrabhága (Chenab) and Iravati (Ravi). In those early days, Sákala was studded with thick forests and inhabited by a pastoral race called Yahars or Yirs.

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