Kőbánya literally means stone quarry and it is no accident that it received this name. There were once enormous stone pits underground and these cellars with their constant temperature were subsequently used for wine and later beer maturation.

The earliest reference to Kőér hegy (Stone-stream Hill) - which has a significant role in the history of the area even today-, can be found in an endowment charter issued by Béla IV. Despite standing only 147 metres in height, this "hill" does indeed stand out from the surrounding Pest Plains and, as its name indicates it was already known as a stone mine (kőbánya) in the 13th century.

The local limestone was created during the Mesozoic era when most of the Carpathian Basin was covered by the Pannonian Sea. It is probable that this area was a bay where the shells of marine animals were deposited in large quantities. These limestone layers were covered with clay later in the Cenozoic era.

These mines lying some distance from the city of Pest were already being intensively exploited in the 17th century and the demand for building materials for the growing city only increased over the centuries. Written sources include proof that, with the special permission of the Buda Pasha, this stone was delivered for the construction of the Reformed church in Kecskemét in the 1600s.

The palace of the Hungarian Academy of Sciences the University Library and the upper section of the Chain Bridge pillars are among the structures in Budapest where this easily dug and carved limestone was used. The rather elementary and erratic methods of extraction meant that quarrying became dangerous towards the end of the 19th century. The pits and cellars dug into the hills survived however and their unique conditions subsequently served the wine and beer production established here.
In the mid 1800s numerous large factories developed in Kőbánya, including the Dreher Breweries. The success of the beer matured in these rock cellars was such that from then on breweries were built in neither Buda nor Pest, but only here in Kőbánya. Over a period of 50 years a total of six factories were established on the site of the former quarry.

During World War II a munitions factory was based in one area. Airplane construction took place in the depths, although there are no documents to prove the alleged assembly of Messerschmitts.

Now Budapest's 10th District, Kőbánya was an independent settlement right up until the end of the 19th century and served as the border of the capital until the 1950s. This has changed dramatically as it has become a geographical centre of the Greater Budapest.