Novi Grad was first mentioned in 1217. under the name CASTRUM NOVUM, which means New Town (Novi Grad), although historians agree that the town was founded in 1280.

The wider area of the municipality was even inhabited in the ancient times, which is proved by the archeological findings in village Donji Rakani and stream basins Vojskova and Japra.

The Middle Ages were marked by Babonjici dukes, the most influential noblemen in Donja Slavonija, an area to which this region belonged. In order to guard it against the Turks, a fortress named Novi Novi was built on the left bank of the Una River, but the Turks took hold of it in 1557 and the whole area remained under the Turkish reign until 1687. By the decision of the Berlin Congress, Austro-Hungarian Empire occupied this area and destroyed the Novi fortress to its very foundations in 1894 hence not even a single trace of it exists today. The next year, due to the political reasons, name Novi Grad was administratively changed into Bosanski Novi. There were wooden bridges across the Una and Sana rivers, which the citizens had to guard against the wild spring and fall floods. For that reason, a symbol of the town was built in 1906-Una quay. In 1872, Novi Grad was the first municipality to have a train station on the new Bosnian railway, which afforded it significant cultural and economic advantages over any other Krajina[3] municipalities. The first hospital was established around the same time.