Dubrovnik was founded in the first half of the 7th century by a group of refugees from Epidaurum (today's Cavtat). They established their settlement at the island and named it Laus. Opposite of that location, at the foot of Srđ Mountain, Slavs developed their own settlement under the name of Dubrovnik (named by "Dub" - type of wood). The settlements were separated by a channel which was filled in 12th century, present Placa or Stradun, and since than the two settlements have been united. At that time the city walls started to be built as a protection from different enemies ( Arabs, Venetian, Macedonians, Serbs, etc.), who wanted to conquer Dubrovnik.

The Republican Constitution of Dubrovnik was strictly aristocratic. The population was divided into three classes: nobility, citizens, and artisans or plebeians. All effective power was concentrated in the hands of nobility. The citizens were permitted to hold only minor offices, while plebeians had no voice in government. Marriage between members of different classes of the society was forbidden. The administrative bodies were the Grand Council (supreme governing body) and the Small Council (executive power) (from 1238.) and the Senate (from 1253). The head of the state was the Duke, elected for a term of office for one month.
Grand Council (Veliko viječe) consisted of exclusively members of the aristocracy; every noble took his seat at the age of 18.
Small Council (Malo viječe) consisted first of 11 members and after 1667 of 7. The Small Council was elected by the Knez or Rector.
The Senate (Viječe umoljenih) was added in 1235 as a consultative body. It consisted of 45 invited members (over 40 years of age).
While the Republic was under the rule of Venice the Rector was Venetian, but after 1358 the Rector was always a Ragusan.
The length of the Rector's service was only one month and a person was eligible for reelection after two years. The rector lived and worked in Rector's Palace but his family remained living in their own house.
The government of the Republic was liberal in character and early showed its concern for justice and humanitarian principles, e.g. slave trading was abolished since 1418.