After Charlemagne's conquest (772–804) of the Saxons, their land was incorporated into the Carolingian empire, and late in the 9th cent. the first duchy of Saxony. Including the four divisions of Westphalia, Angria, Eastphalia, and Holstein, it occupied nearly all the territory between the Elbe and Saale rivers on the east and the Rhine on the west; it bordered on Franconia and Thuringia in the south. Duke Henry I (Henry the Fowler) of Saxony was elected German king in 919, and his son, Emperor Otto I, bestowed (961) Saxony on Hermann Billung (d. 973), a Saxon nobleman, whose descendants held the duchy until the extinction of the male line in 1106. Lothair of Supplinburg (see Lothair II) bestowed it on his Guelphic son-in-law, Henry the Proud, who was already duke of Bavaria.

In 1142 the duchy passed to Henry the Lion, son of Henry the Proud. The struggle between Henry the Lion and Emperor Frederick I ended with Henry's loss of all his fiefs in 1180. The stem duchy was broken up into numerous fiefs. The Guelphic heirs of Henry the Lion retained only their allodial lands, the duchy of Brunswick. The ducal title of Saxony went to Bernard of Anhalt, a younger son of Albert the Bear of Brandenburg and founder of the Ascanian line of Saxon dukes. Besides Anhalt, Bernard received Lauenburg and the country around Wittenberg, on the Elbe. These widely separate territories continued after 1260 under separate branches of the Ascanians as Saxe-Lauenburg and Saxe-Wittenberg.

The Golden Bull of 1356 raised the duke of Saxe-Wittenberg to the permanent rank of elector, with the right to participate in the election of the Holy Roman Emperor. Electoral Saxony, as his territory was called, was a relatively small area along the middle Elbe. To the S of Electoral Saxony extended the margraviate of Meissen, ruled by the increasingly powerful house of Wettin. The margraves of Meissen acquired (13th–14th cent.) the larger parts of Thuringia and of Lower Lusatia and the intervening territories, and in 1423 Margrave Frederick the Warlike added Electoral Saxony; he became (1425) Elector Frederick I. Thus, Saxony shifted to E central and E Germany from NW Germany.

In 1485 the Wettin lands were partitioned between two sons of Elector Frederick II; the division came to be permanent. Ernest, founder of the Ernestine branch of Wettin, received Electoral Saxony with Wittenberg and most of the Thuringian lands. Albert, founder of the Albertine branch, received ducal rank and the Meissen territories, including Dresden and Leipzig. Duke Maurice of Saxony, a grandson of Albert and a Protestant, received the electoral title in the 16th cent.; it remained in the Albertine branch until the dissolution (1806) of the Holy Roman Empire.

The rivalry between Saxony and Brandenburg (after 1701 the kingdom of Prussia) was a decisive factor in later Saxon history, as was the election (1697) of Augustus II (who was Frederick Augustus I as elector of Saxony) as king of Poland; the election led to an economic partnership between the declining Poland and Saxony, whose prestige was thereby diminished. In the War of the Austrian Succession, Saxony adhered to what had become its traditional wavering policy, changing sides in the middle of the conflict. The death (1763) of Augustus III ended the union with Poland.

The period of Saxon rule in Poland marked a time of economic and social decay but of cultural and artistic flowering. Augustus II and Augustus III were lavish patrons of art and learning and greatly beautified their capital, Dresden. The universities of Wittenberg and Leipzig had long been leading intellectual centers, and 18th-century Leipzig led in the rise of German literature as well as in music, which reached its first peak in J. S. Bach.

Saxony sided with Prussia against France early in the French Revolutionary Wars, but changed sides in 1806. For this act its elector was raised to royal rank, becoming King Frederick Augustus I. His failure to change sides again before Napoleon's fall cost him (1815) nearly half his kingdom at the Congress of Vienna. The kingdom of Saxony lost Lower Lusatia, part of Upper Lusatia, and all its northern territory including Wittenberg and Merseburg to Prussia. Its principal remaining cities were Dresden, Leipzig, Chemnitz, and Plauen. The larger part of the territories ceded in 1815 were incorporated with several other Prussian districts into the Prussian province of Saxony, with Magdeburg its capital. (This was united after 1945 with Anhalt to form the state of Saxony-Anhalt.) The kingdom sided (1866) with Austria in the Austro-Prussian War and was defeated. It was forced to pay a large indemnity and to join the North German Confederation. From 1871 until the abdication (1918) of Frederick Augustus III, it was a member state of the German Empire.

The kingdom of Saxony became the state of Saxony after 1918 and joined the Weimar Republic. Dresden became its capital. In the 19th and early 20th cent. Saxony became one of the most industrialized German states, with a noted textile industry. Chemnitz became its main industrial center and Leipzig its chief commercial hub.

After World War II the state of Saxony was reconstituted (1947) under Soviet occupation; it lost a small district E of the Lusatian Neisse, but gained a part of Silesia W of the Neisse. The postwar state became part of the German Democratic Republic (East Germany) in 1949. From 1952 to 1990 Saxony was divided into the East German districts of Handeburg Halle, Leipzig, and Cottbus; the districts produced about a third of East Germany's gross domestic product. In 1990, prior to German reunification, the districts were reintegrated as a state.