Amlapura is a small but busy town. It was formerly known as Karangasem, but was renamed after being rebuilt following the devastation by Gunung Agung in 1963.

The former Karangasem was an important town in the late 17th century, ruled by the powerful Karangasem royal family which in the 18th century ousted the kings of Sulawesi from Lombok, and thereafter divided up the island among themselves. Later, the king of Lombok - who is descended from the Karangasem bloodline - attacked Karangasem and made his ancestral town a vassal state of Lombok. In 1894, Karangasem came under Dutch rule following Dutch conquest of Lombok.

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