Domažlice was first recorded as a town in 1231. Přemysl Otakar II of Bohemia ordered the city to be fortified for the purpose of protecting the border with Bavaria. It would remain fortified from 1262 to 1265. Border guards were recruited from the Chodové (Slavic free farmers) who settled in the vicinity of Domažlice.
The city was mortgaged to Bavaria in 1331, lasting until 1419 (with some interruptions). Under Hussite rule, German citizens were expelled from the city, and since then, the population has been predominantly Czech. In 1431, Prokop the Bald defeated the crusaders of the Holy Roman Empire near Domazlice. The 15th and 16th century saw Domazlice change hands frequently, but its importance diminished following the end of the Thirty Years' War. It was not until 1770 that it recovered, largely due to innovations in the textile industry.
Until 1918, the town was part of the Austrian empire, and the head of the Taus district, one of the 94 "Bezirkshaupt mannschaften" in Bohemia:
Within the context of the Czech National Revival, Domazlice became a central place during the 19th century. At the time, it was the most western ethnic Czech town, very close to the border with the Kingdom of Bavaria. In the city, a pilgrimage took place on August 13, 1939, which developed into a large Czech protest demonstration against the German occupation and control of the ethnic Czech Protectorate of Bohemia and Moravia.
In 2005 a mass grave was discovered on the outskirts of the town, holding 54 Germans, mainly members of the local SA, executed by the Czech resistance after the end of the war, around May 8, 1945
