The earliest known site at this location was Cius, which Philip V of Macedonia granted to the Bithynian king Prusias I in 202 BC, for his help against Pergamum and Heraclea Pontica (modern Karadeniz Ereğli). Prusias renamed the city after himself, as Prusa.
It was later a major city, located on the westernmost end of the famous Silk Road, and was the capital of the Ottoman Empire following its capture from the shrinking Byzantine Empire in 1326. The capture of Edirne in 1365 brought that city to the fore as well, but Bursa remained an important administrative and commercial center even after it lost its status as the sole capital. Sortly after it was taken by the Ottomans they developed a school of theology at Bursa. This school attracted Muslim schoolars from throughout the Middle East and continued to function after the capital had been moved elsewhere.
During the Ottoman rule, Bursa was the source of most royal silk products. Aside from the local production, it imported raw silk from Iran, and occasionally China, and was the 'factory' for the kaftans, pillows, embroidery and other silk products for the royal palaces up through the 17th century. Another traditional occupation is knife making and, historically, horse carriage building. Nowadays one can still find hand-made knives as well as other products in rich variety produced by artisans, but instead of carriages, there is a big automobile industry.
Bursa sits on a geologic fault like most of Turkey. The city was partially leveled by strong earthquakes coupled with fires and was rebuilt after each time. The last devastating earthquake occurred in 1885.