One hypothesis of the name suggests that "Kandahar" has evolved from "Iskandar", the local dialect version of the name Alexander, after Alexander the Great who founded the city in 330 BC and named it Alexandria in Arachosia. A temple to the deified Alexander as well as an inscription in Greek and Aramaic by Emperor Ashoka, who lived a few decades later, have been discovered in Kandahar. The Sri Lankan Pali work the Mahavamsa (Chap. XXIX) refers to the city as "the Greek city of Alasanda" when relating how its Indo-Greek King Menander I (165 BC – 135 BC), who practiced Greco-Buddhism, sent "a Greek (yona) Buddhist head monk" named Mahadharmaraksita (literally translated 'Great Teacher, Preserver of the Dharma') with 30,000 Buddhist monks to Sri Lanka for the dedication of the Great Stupa in Anuradhapura.

Ibn Battuta mentions Kandahar in the 14th century by describing it as a large and prosperous town three nights journey from Ghazni. It has been then mentioned extensively by Mughal Emperor Babur and others.

An alternative etymology derives the name of the city from Gandhara, the name of an ancient Hindu-Buddhist kingdom located along the Kabul and Swat rivers of Afghanistan and Pakistan; Kandahar is not in the former territory of Gandhara.

A folk etymology offered is that the word "kand" or "qand" in Persian and Pashto (the local languages) means "candy". The name "Candahar" or "Kandahar" in this form probably translates to candy area. This probably has to do with the location being fertile and historically known for producing fine grapes, pomegranates, apricots, melons and other sweet fruits.

Ernst Herzfeld claimed Kandahar perpetuated the name of the Indo-Parthian king Gondophares, who re-founded the city under the name Gundopharron.

Prehistory

Excavations of prehistoric sites by archaeologists such as Louis Dupree and others suggest that the region around Kandahar is one of the oldest human settlements known so far.

Early peasant farming villages came into existence in Afghanistan ca. 5000 B.C., or 7000 years ago. Deh Morasi Ghundai, the first prehistoric site to be excavated in Afghanistan, lies 27 km (17 mi) southwest of Kandahar (Dupree, 1951). Another Bronze Age village mound site with multiroomed mud-brick buildings dating from the same period sits nearby at Said Qala (J. Shaffer, 1970). Second millennium B.C. Bronze Age pottery, copper and bronze horse trappings and stone seals were found in the lowermost levels in the nearby cave called Shamshir Ghar (Dupree, 1950). In the Seistan, southwest of these Kandahar sites, two teams of American archaeologists discovered sites relating to the 2nd millennium B.C. (G. Dales, University Museum, University of Pennsylvania, 1969, 1971; W, Trousdale, Smithsonian Institution, 1971 – 76). Stylistically the finds from Deh Morasi and Said Qala tie in with those of pre-Indus Valley sites and with those of comparable age on the Iranian Plateau and in Central Asia, indicating cultural contacts during this very early age.

—?N. Dupree, 1971

British excavations in the 1970s discovered that Kandahar existed as a large fortified city during the early 1st millennium BCE; while this earliest period at Kandahar has not been precisely dated via radiocarbon, ceramic comparisons with the latest period at the major Bronze Age city of Mundigak have suggested an approximate time-frame of 1000 to 750 BCE. This fortified city became an important outpost of the Achaemenid Empire in the 6th to 4th centuries BCE, and formed part of the province of Arachosia.

Alexandria

The now "Old Kandahar" was founded in 330 BC by Alexander the Great, near the site of the ancient city of Mundigak (established around 3000 BC). Mundigak served as the provincial capital of Arachosia and was ruled by the Medes followed by the Achaemenids until the arrival of the Greeks from Macedonia. The main inhabitants of Arachosia were the Pactyans, an ancient Iranian tribe, who may be among the ancestors of today's Pashtuns. Kandahar was named Alexandria, a name given to cities that Alexander founded during his conquests.

Kandahar has been a frequent target for conquest because of its strategic location in Southern Asia, controlling the main trade route linking the Indian subcontinent with the Middle East and Central Asia. The territory became part of the Seleucid Empire after the death of Alexander. It is mentioned by Strabo that a treaty of friendship was established eventually between the Greeks and the Mauryans (Indians). The city eventually became part of the Greco-Bactrian Kingdom (250 BC-125 BC), and continued that way for two hundred years under the later Indo-Greek Kingdom (180 BC – 10 CE). King Menander I (165 BC – 135 BC) of the Indo-Greek Kingdom practiced Greco-Buddhism and is recorded by the Mahavamsa (Chap. XXIX) to have sent "a Greek ("Yona") Buddhist head monk" named Mahadharmaraksita (literally translated as 'Great Teacher/Preserver of the Dharma') with 30,000 Buddhist monks from "the Greek city of Alasandra" (possibly Alexandria in Arachosia, as Kandhar was known under the Greeks) to Sri Lanka for the dedication of Great Stupa Buddhist temple in Anuradhapura. (See also Milinda Panha.)

While the Diadochi were warring amongst themselves, the Mauryans were developing in the northern part of the Indian subcontinent. The founder of the empire, Chandragupta Maurya, confronted a Macedonian invasion force led by Seleucus I in 305 BC and following a brief conflict, an agreement was reached as Seleucus ceded Gandhara and Arachosia and areas south of Bagram to the Mauryans. During the 120 years of the Mauryans in southern Afghanistan, Buddhism was introduced and eventually become a major religion alongside Zoroastrianism and local pagan beliefs. The ancient Grand Trunk Road was built linking what is now Kabul to various cities in the Punjab and the Gange