The Mughal Empire was founded by Babur (reigned 1526–1530), a Central Asian ruler who was descended from the Turco-Mongol conqueror Timur (the founder of the Timurid Empire) on his father's side, and from Genghis Khan on his mother's side. Ousted from his ancestral domains in Central Asia, Babur turned to India to satisfy his ambitions. He established himself in Kabul and then pushed steadily southward into India from Afghanistan through the Khyber Pass. Babur defeated Ibrahim Lodi, Sultan of Delhi, at the First Battle of Panipat in 1526 CE and founded the Mughal Empire.

After losing Samarkand for the second time, Babur gave attention to conquer Hindustan as he reached the banks of the Chenab in 1519. Until 1524, his aim was to only expand his rule to Punjab, mainly to fulfill his ancestor Timur's legacy, since it used to be part of his empire. At that time, most of North India was under the rule of Ibrahim Lodi of the Lodi dynasty, but the empire was crumbling and there were many defectors. The First Battle of Panipat, on 21 April 1526, was fought between the invading forces of Babur and the Lodi dynasty. It took place in North India and marked the beginning of the Mughal Empire and the end of the Delhi Sultanate. This was one of the earliest battles involving gunpowder firearms and field artillery in the Indian subcontinent which were introduced by Mughals in this battle.

The instability of the empire became evident under Humayun (reigned 1530–1556), who was forced into exile in Persia by rebels.

After Humayun set out from his expedition in Sindh, along with 300 camels (mostly wild) and 2000 loads of grain, he set off to join his brothers in Kandahar after crossing the Indus River on 11 July 1543 along with the ambition to regain the Mughal Empire and overthrow the Suri dynasty. Among the tribes that had sworn allegiance to Humayun were the Leghari, Magsi, Rind and many others.

Humayun fled to the refuge of the Safavid Empire in Persia, marching with 40 men, his wife Bega Begum, and her companion through mountains and valleys. Humayun's exile in Persia established diplomatic ties between the Safavid and Mughal Courts, and led to increasing Persian cultural influence in the Mughal Empire.

Shah Tahmasp urged that Humayun convert from Sunni to Shia Islam, and Humayun eventually accepted, in order to keep himself and several hundred followers alive. Shah staged a celebration for Humayun, with 300 tents, an imperial Persian carpet, 12 musical bands and "meat of all kinds". Here the Shah announced that all this, and 12,000 elite cavalry were his to lead an attack on his brother Kamran. All that Shah Tahmasp asked for was that, if Humayun's forces were victorious, Kandahar would be his.

With this Persian Safavid aid Humayun took Kandahar from Askari Mirza after a two-week siege. Kandahar was, as agreed, given to the Shah of Persia who sent his infant son, Murad, as the Viceroy. Humayun now prepared to take Kabul, ruled by his brother Kamran Mirza. In the end, there was no actual siege. Kamran Mirza was detested as a leader and as Humayun's Persian army approached the city hundreds of Kamran Mirza's troops changed sides, flocking to join Humayun and swelling his ranks.

Humayan falls down stairs and dies, succeeded by 13-year-old son Akbar, later Akbar the Great. Akbar consolidates the Mughal Empire. Through incessant warfare, he is able to annex all of northern and part of central India. Akbar builds a new capital, Fatehpur Sikri, near Delhi. Although he never renounces Islam, he takes an active interest in other religions, persuading Hindus, Parsis, Christians, and Muslims to engage in religious discussion. He establishes political, administrative, and military structures that give the empire stability and staying power. During his reign, the nature of the state changed to a secular and liberal one, with emphasis on cultural integration. He also introduced several far-sighted social reforms, including prohibiting sati, legalising widow remarriage and raising the age of marriage.

When Humayun died, this provided an ideal opportunity to Hemu and the Suri to defeat the Mughals and reclaim lost territory. Hemu started a rapid march from Bengal and drove the Mughals out of Bayana, Etawah, Bharthana, Bidhuna, Lakhna, Sambhal, Kalpi, and Narnaul. In Agra, the governor evacuated the city and fled without a fight upon hearing of Hemu's impending invasion. In pursuit of the governor, Hemu reached Tughlaqabad, a village just outside Delhi where he ran into the forces of the Mughal governor of Delhi, Tardi Beg Khan, and defeated them in the Battle of Tughlaqabad. He took possession of Delhi after a day's battle on 7 October 1556 and claimed royal status assuming the title of Vikramaditya (or Bikramjit).

In 1593, Akbar began military operations against the Deccan Sultans who had not submitted to his authority. He besieged Ahmednagar Fort in 1595, forcing Chand Bibi to cede Berar. A subsequent revolt forced Akbar to take the fort in August 1600. Akbar occupied Burhanpur and besieged Asirgarh Fort in 1599, and took it on 17 January 1601, when Miran Bahadur Shah refused to submit Khandesh. Akbar then established the Subahs of Ahmadnagar, Berar and Khandesh under Prince Daniyal.

The British East India Company defeats Portuguese at Surat, Gujarat State and establishes the first warehouse in India

The Deccan famine of 1630–1632 was a famine in the Deccan Plateau, Khandesh and Gujarat. The famine was the result of three consecutive staple crop failures. The main reasons were climate and plague, leading to intense hunger, disease, and displacement in the region. This famine remains one of the most devastating famines in the history of India, and was the most serious famine to occur in the Mughal Empire.

In 1657, while Aurangzeb attacked Golconda and Bijapur in the Deccan, the Hindu Maratha warrior, Shivaji, used guerrilla tactics to take control of three Adil Shahi forts formerly under his father's command. With these victories, Shivaji assumed de facto leadership of many independent Maratha clans. Shivaji crowned himself Chhatrapati or the ruler of the Maratha Confederacy in 1674. While Aurangzeb continued to send troops against him, Shivaji expanded Maratha control throughout the Deccan until his death in 1680. Shivaji was succeeded by his son, Sambhaji. Militarily and politically, Mughal efforts to control the Deccan continued to fail.