There has been settlement in the area since pre-Croatian times when the Illyrians inhabited the region. The Croats arrived to the region in the eight century.
Historical records first mention Posušje in 1378 when it was still part of the Croatian Kingdom. Soon after it became a part of the Bosnian kingdom. The Ottoman invasion of Bosnia began in 1463, and by 1493 Posušje fell under Turkish rule. In 1878, Ottoman rule ended with the Congress of Berlin establishing Austro-Hungarian rule in the region. After World War I Posušje was part of the Kingdom of Yugoslavia where it was in Primorje banate. In 1939 the banates were merged and the Croatian banate was formed. From 1941 to 1945 the town was part of the Independent State of Croatia.
With the end of World War II, Posušje was once again in the union of Yugoslavia as part of Bosnia and Herzegovina. In 1992 the republic of Bosnia and Herzegovina gained independence, but was the scene of intense ethnic conflict until 1995.
Chapi