Nicosia is the southeasternmost of all EU member states' capitals. It has been continuously inhabited for over 4,500 years and has been the capital of Cyprus since the 10th century. The Greek Cypriot and Turkish Cypriot communities of Nicosia segregated into the south and north of the city respectively in early 1964, following the fighting of the Cyprus crisis of 1963–64 that broke out in the city. This separation became a militarized border between the Republic of Cyprus and Northern Cyprus after Turkey invaded the island of Cyprus in 1974, occupying the north of the island, including northern Nicosia. Today North Nicosia is the capital of Northern Cyprus, a state recognized only by Turkey, that is considered to be occupied Cypriot territory by the international community.
Apart from its legislative and administrative functions, Nicosia has established itself as the island's financial capital and its main international business centre. In 2018, Nicosia was the 32nd richest city in the world in relative purchasing power.
The earliest mention of Nicosia is in the clay prism of the Assyrian king Esarhaddon in 672 BC. This is a mention to the city-state of Ledra located on the site of Nicosia, and the city is named "Lidir". The name Ledra and variations (such as Ledroi) remained in use as late as 392 AD, when it was used in writing by Saint Jerome. However, that text also refers the city as "Leucotheon", and early Christian sources of this period are the first to use similar variations of the name Lefkosia (e.g. Leuteonos). The origin of the name "Lefkosia" is considered by scholars to be a "toponymic puzzle". The name is recorded in the majority of Byzantine sources as "Leukousia", and it is accepted in literature that the name "most probably" derives from the Greek phrase "leuke ousia" ("white estate").