The capital of Khuzestan, Ahvaz, is located almost in the centre of the province, 140 kilometres south of Shush and 130 kilometres north of Khoram Shahr. It is an industrial town, largely rebuilt after the war with Iraq, but is useful as a stopover for people visiting Shush and the region. Note that distances by road between Ahvaz and the major tourist sites outside the province, such as Shiraz or Hamadan, are quite considerable.
Ahvaz has the world's worst air pollution according to a survey by the World Health Organization in 2011. Ahvaz is built on the banks of the Karun River and is situated in the middle of Khūzestān Province. The city has an average elevation of 20 meters above sea level.
The word Ahvaz is a Persianized form, which in turn itself is derived from a Persian word. The Dehkhoda Dictionary specifically defines the Arabic "Suq-al-Ahwaz" as "Market of the Khuzis", where "Suq" is the Arabic word for market, and "Ahwaz" is a broken plural (اسم جمع) of the form "af'āl" (افعال) of the word "Huz", which itself comes from the Persian Huz, from Achaemenid inscriptions where the term first appears. Thus, "Ahwaz" in Arabic means "the Huz-i people", which refers to the non-Arabic original inhabitants of Khūzestān.
The term "Huz", meanwhile, is the Old Persian rendition of Suz (Susa-Susiana), the native Elamite name of the region. Old Persian commonly changed the initial "s" in a foreign word into an "h," most famously, in its rendition of the name the river and the people Sindh/Sindhi into Hind/Hindi, which was then Hellenized into Indus, whence India.
Ahvaz is the anagram of "Avaz" and "Avaja" which appear in Darius's epigraph. This word appears in Naqsh-Rostam inscription as "Khaja" or "Khooja" too.
First named Ōhrmazd-Ardašēr (Roman Hormizdartazir) it was built near the beginning of the Sassanid dynasty on what historians believe to have been the site of the old city of Taryana, a notable city under the Persian Achaemenid dynasty, or the city of Aginis referred to in Greek sources where Nearchus and his fleet entered the Pafitigris.. It was founded either by Ardashir I in 230 (cf. Encyclopædia Iranica, al-Muqaddasi, et al.) or (according to the Middle Persian Šahrestānīhā ī Ērānšahr) by his grandson Hormizd I; the town's name either combined Ardashir's name with the Zoroastrian name for God, Ōhrmazd or Hormizd's name with that of his grandfather. It became the seat of the province, and was also referred to as Hūmšēr. During the Sassanid era, an irrigation system and several dams were constructed, and the city prospered. Examples of Sassanid-era dams are Band-e Bala-rud, Band-e Mizan, Band-e Borj Ayar and Band-e Khak. The city replaced Susa, the ancient capital of Susiana, as the capital of what was then called Khuzestān.
The city had two sections; the nobles of the city lived in one part while the other was inhabited by merchants. When the Arabs invaded the area in 640, the part of the city home to the nobility was demolished but the Hūj-ī-stānwāčār "Market of Khūz State", the merchant area, remained intact. The city was therefore renamed Sūq al-Ahwāz, "Market of the Khuz", a semi-literal translation of the Persian name of this quarter - Ahwāz being the Arabic broken plural of Hûz, taken from the ancient Persian term for the native Elamite peoples, Hūja (remaining in medieval khūzīg "of the Khuzh" and modern Khuzestān "Khuz State", as noted by Dehkhoda dictionary.
During the Umayyad and Abbasid eras, Ahvaz flourished as a center for the cultivation of sugarcane and as the home of many well-known scholars. It is discussed by such respected medieval historians and geographers as ibn Hawqal, Tabari, Istakhri, al-Muqaddasi, Ya'qubi, Masudi, and Mostowfi Qazvini. Nearby stood the Academy of Gundishapur, where the modern-day teaching hospital is said to have been first established.
Ahvaz was devastated in the bloody Mongol invasions of the 13th and 14th centuries and subsequently declined into a mere village. The dam and irrigation channels, no longer maintained, eroded and finally collapsed early in the 19th century. During this time Ahvaz was primarily inhabited by the original Khuzhis (Persians) and a small number of Sabians. Although most Arab migrants fled the city, a few stayed. Some minor cultivation continued, while all evidence of sugarcane plantations is still going on in Haft Teppe area in north of Ahvaz, although ruins of sugarcane mills from the medieval era remained in existence. Several ruins of water mills also still remain in Shoush and Shoushtar.
The seat of the province has for the most of its history been in the northern reaches of the land, first at Susa (Shush) and then at Shushtar. During a short spell in the Sasanian era, the capital of the province was moved to its geographical center, where the river town of Hormuz-Ardashir (modern Ahvaz). However, later in the Sasanian time and throughout the Islamic era, the provincial seat returned and stayed at Shushtar, until the late Qajar period. With the increase in the international sea commerce arriving on the shores of Khuzestan, Ahvaz became a more suitable location for the provincial capital. The River Karun is navigable all the way to Ahvaz (above which, the Karun flows through rapids). The town was thus refurbished by the order of the Qajar king, Naser al-Din Shah and renamed after him, Nâseri. Shushtar quickly declined, while Ahvaz/Nâseri prospered to the present day.
In the 1880s, under Qajar rule, the Karun River was dredged and re-opened to commerce. A newly built railway crossed the Karun at Ahvaz. The city again became a commercial crossroads, linking river and rail traffic. The construction of the Suez Canal further stimulated trade. A port city was built near the old village of Ahvaz, and named Bandar-e-Naseri in honor of Nassereddin Shah Qajar.
Oil was found near Ahvaz in the early 20th century, and the city once again grew and prospered as a result of this new found wealth. From 1897-1925, the city of Ahvaz was in the hands of heshmatoddoleh Ghajar, whom acted as governor and Sarhang Reza Gholi Khane Arghoon as commander of Ghajari's army based in Khuzestan. Khaz'al Khan/Sheikh Khaz'al was appointed by Mozaffareddin shah in Khorramshahr, Sardar Asad Bakhtiari as the most powerful leader of Khuzestan's Bakhtiaries. He had power and authority over most regions of Khuzestan, such as Dezful, Shushtar, Izeh, even Ahvaz and Amir mojahede bakhtiari in Ramhormoz and Behbahan. At this time, the newly founded Ahvaz was named Nâseri in honour to its founder Nassereddin Shah Qajar. Afterwards, during the Pahlavi period, it resumed its old name, Ahvaz. The government of the Khūzestān Province was transferred there from Shûshtar in 1926. The trans-Iranian railroad reached Ahvaz in 1929 and by the World War II, Ahvaz had become the principal built-up area of interior of Khūzestān. Professional segregation remained well marked between various groups in that period still feebly integrated: Persians, sub-groupings of Persians and Arabs. Natives of the Isfahan region held an important place in retail trade, owners of cafes and hotels and as craftsmen.
Iraq attempted to annex Khūzestān and Ahvaz in 1980, resulting in the Iran–Iraq War (1980–1988). Ahvaz was close to the front lines and suffered badly during the war.
Iraq had pressed its claims to Khūzestān. Iraq had hoped to exacerbate ethnic tensions and win over popular support for the invaders. Most accounts say that the Iranian Arab inhabitants resisted the Iraqis rather than welcome them as liberators. However, some Iranian Arabs claim that as a minority they face discrimination from the central government; they agitate for the right to preserve their cultural and linguistic distinction and more provincial autonomy.