The Jamnagar was originally known as Halar,
According to vedic / Pauranik literature, Lord Krishna established his kingdom at Dwarka, Dwarka is now in Jamnagar district, He establsished his base in Jamnagar (Dwarka) after his migration from Mathura and it is to this great Yadava race that the Jams of Nawanagar trace their descent.
Later in 1535 A.D. Jam Rawal who descended on the northern coast of Kathiawar, founded Jamnagar which was then named as Halar.
According to bardic chronicles, Jam Lakhaji had two cousins Tamachi Deda and Hamirji Jadeja, they envied his reputation for valor. Their envy was heightened by the fame of Jam Lakhaji at the siege of Pawagadh. So largely did he contribute to its capture by Bahadurshah, the Emperor of Gujarat, that he was bestowed 12 villages by him. As Jam Lakaji was going to take possession of his new fief, he was treacherously killed by his cousins Tamachi Deda and Hamirji Jadeja. Jam Lakhajis son Jam Rawal escaped and on growing up, took vengeance of his fathers murder in the same manner by killing Hamirji Jadeja.
Hamirjis two sons Khengarji and Sahibji fled to Delhi and after twelve months of waiting to meet the Great Moghul Emperor Humayun, they got the chance to join the crowd goingalong with the Emperor for lion hunting.
During the lion hunt, they got the chance to kill the lion just when it was going to attack the Emperor. As a reward, an army of 1,00,000 was sent with them to regain back their kingdom.
When Jam Rawal heard of the two princes coming back to the Kutch with the imperial army, he started getting ready for the battle. On one night, Goddess Ashapura came in his dream and told him that as he had broken the oath taken on her name about not killing Hamirji, even though, he was the person responsible for the death of his father. She should have punished him, but as he had at all other times honored her. So he should no longer dwell in Kutch but cross the sea and take Kathiawar as a dwelling place.
Upon awakening he called his counselors and discussed the dream, they agreed that he must leave Kutch and found for himself a Kingdom across the Gulf. So Jam Rawal along with his soldiers and many traders marched out. On the way he killed and conquered the territory of King Tamachi the other conspirator in the killing of his father, and he also conquered the town of Dhrol and its dependencies and gave them to his brother Hardholji, who was later killed in battle during that period, and the State of Dhrol was given to his eldest son, Jasoji.
Thus Jam Rawal made himself master of a great territory and the need for a capital arose.
The story goes like this, that once on a hunting trip on the land of present day Jamnagar, a hare was found to be brave enough to turn on the hunting dogs and putting them to flight. Deeply impressed by this, Jam Rawal thought that if this land can breed such hares, if his capital was built on this land, the men born here would be superior than other men.
He counsulted his astrologers and wise men, and the day chosen for laying the foundation stone was the 7th day of the bright half of the month of srawan, VS 1956. (August 1540 AD) on the banks of two rivers Rangmati and Nagmati and named it Nawanagar meaning new town.
Nawanagar eventually came to be known as Jamnagar meaning the town of the Jams.