There are two theories about the origin of the name "Kotli". One is that in ancient times Prince Raja Shahswar Khan built a small house here and called it "Kot", which became "Kotli". Another theory is that the name is derived from the Sanskrit word Kotli which means to "" or to "live in". At one time the area was inhabited by the Mangran and Solhan peoples, and was called Kotli Solwhan.