Cotton plants as imagined and drawn by John Mandeville in the 14th century. Cotton was cultivated by the inhabitants of the Indus Valley Civilization by the 5th millennium BCE - 4th millennium BCE. The Indus cotton industry was well developed and some methods used in cotton spinning and fabrication continued to be used till the modern Industrialization of India. Well before the Common Era. The use of cotton textiles had spread from India to the Mediterranean and beyond.

According to The Columbia Encyclopedia, Sixth Edition: "Cotton has been spun, woven, and dyed since prehistoric times. It clothed the people of ancient India, Egypt, and China. Hundreds of years before the Christian era cotton textiles were woven in India with matchless skill, and their use spread to the Mediterranean countries. In the 1st cent. Arab traders brought fine muslin and calico to Italy and Spain. The Moors introduced the cultivation of cotton into Spain in the 9th cent. Little cotton cloth was imported to England before the 15th cent., although small amounts were obtained chiefly for candlewicks. By the 17th cent. the Honourable East India Company was bringing rare fabrics from India. Indigenous peoples of the Americas skillfully spun and wove cotton into fine garments and dyed tapestries. Cotton fabrics found in Peruvian tombs are said to belong to a pre-Inca culture. In color and texture the ancient Peruvian and Mexican textiles resemble those found in Egyptian tombs."

The earliest cultivation of cotton discovered thus far in the Americas occurred in Mexico, some 5,000 years ago. The indigenous species was Gossypium hirsutum which is today the most widely planted species of cotton in the world, constituting about 90% of all production worldwide. The greatest diversity of wild cotton species is found in Mexico, followed by Australia and Africa.

During the late Medieval period, cotton became known as an International trade fiber in northern Europe, without any knowledge of how it was derived, other than that it was a Plant; noting its similarities to wool, people in the region could only imagine that cotton must be produced by plant-borne sheep. John Mandeville, writing in 1350, stated as fact the now-preposterous belief: "There grew there [India] a wonderful tree which bore tiny lambs on the ends of its branches. These branches were so pliable that they bent down to allow the lambs to feed when they are hungrier. This aspect is retained in the name for cotton in many European languages, such as German language Baumwolle, which translates as "tree wool" . By the end of the 16th century, cotton was cultivated throughout the warmer regions in Asia and the Americas. The Vegetable Lamb of Tartary, India's cotton-processing sector gradually declined during United Kingdom expansion in India and the establishment of British Raj during the late 18th and early 19th centuries.

The advent of the Industrial Revolution in Britain provided a great boost to cotton manufacture, as textiles emerged as Britain's leading export. In 1738 Lewis Paul and ohn Wyatt, of Birmingham England, patented the Roller Spinning machine, and the flyer-and-bobbin system for drawing cotton to a more even thickness using two sets of rollers that traveled at different speeds. Later, the invention of the Spinning jenny in 1764 and Ark Wright’s Spinning frame (based on the Roller Spinning Machine) in 1769 enabled British weavers to produce cotton yarn and cloth at much higher rates. From the late eighteenth century onwards, the United Kingdom of Great Britain and Northern Ireland city of Manchester acquired the nickname " Cottonopolis" due to the cotton industry's omnipresence within the city, and Manchester's role as the heart of the global cotton trade.

By the 1840, India was no longer capable of supplying the vast quantities of cotton fibers needed by mechanized British factories, while shipping bulky, low-price cotton from India to Britain was time-consuming and expensive. This, coupled with the emergence of American cotton as a superior type (due to the longer, stronger fibers of the two domesticated native American species, Gossypium hirsutum and Gossypium barbadense), encouraged British traders to purchase cotton from plantations in the United States and the Caribbean. This was also much cheaper as it was produced by unpaid Slavery in the United States. By the mid 19th century, " King Cotton " had become the backbone of the southern American economy. In the United States, cultivating and harvesting cotton became the leading occupation of Slavery in the United States.

During the American Civil War, American cotton exports slumped due to a United States of America Blockade on Confederate States of America ports, also because of a strategic decision by the Confederate Government to cut exports, hoping to force Britain to recognize the Confederacy or enter the war, prompting the main purchasers of cotton, United Kingdom of Great Britain and Ireland and France, to turn to Egypt cotton. British and French traders invested heavily in cotton plantations and the Egyptian government of Isma'il Pasha took out substantial loans from European bankers and stock exchanges. After the American Civil War ended in 1865, British and French traders abandoned Egyptian cotton and returned to cheap American exports, sending Egypt into a Deficit spiral that led to the country declaring Bankruptcy in 1876, a key factor behind Egypt's annexation by the British Empire in 1882.

Cotton remained a key crop in the southern economy after Emancipation Proclamation and the end of the civil war in 1865. Across the South, Sharecropping evolved, in which free black farmers worked on white-owned cotton plantations in return for a share of the profits. Cotton plantations required vast labor forces to hand-pick cotton fibers, and it was not until the 1950s that reliable harvesting machinery was introduced into the South (prior to this, cotton-harvesting machinery had been too clumsy to pick cotton without shredding the fibers). During the early Twentieth century, employment in the cotton industry fell as machines began to replace laborers, and as the South's rural labor force dwindled during the First and Second World Wars. Today, cotton remains a major export of the southern United States, and a majority of the world's annual cotton crop is of the long-staple American variety.