The city of Luxembourg proper was founded in 963, and its strategic position soon promised it a great fate. Luxembourg was at the crossroads of Western Europe and became heavily fortified, and you can still see the extensive city walls and towers which are the most distinctive aspect of the cityscape. Due to its key position, Luxembourg was raised up to a Duchy that included a much larger territory that stretched into present-day Belgium, Netherlands, Germany and France. The powerful Habsburg family kept its hands on it until late Renaissance times.

After the Napoleonic wars, the Duchy of Luxembourg was granted to the Netherlands. It had a special status as a member of the German confederacy, and the citadel was armed with a Prussian garrison: Luxembourg was still a strategic lock that everybody aimed at controlling. It was granted the title "Grand Duchy" in 1815, but lost some territories that are today parts of France and Germany.

During the course of the 19th century, developments in warfare and the appearance of artillery made Luxembourg obsolete as a stronghold, and it became little more than a rural territory of no strategic interest. The Germans relinquished their rights over it and moved their garrison out, its western half was granted to Belgium in 1839, and the Netherlands granted it complete independence in 1867. Since then, Luxembourg has arisen from a poor country of fields and farms to a modern economy relying on financial services and high-tech industries.

Overrun by Germany in both world wars, Luxembourg was one of the major battlefields of the Battle of the Bulge in the winter of 1944-1945, a story well documented in the museum at Diekirch. The state ended its neutrality in 1948 when it entered into the Benelux Customs Union, and it joined NATO the following year. In 1957, Luxembourg became one of the six founding countries of the European Economic Community (later the European Union), and it joined the euro currency area in 1999.