The last Mughal governor, Nawab Nasir Khan welcomed the Afghan King, Mohammed Nadir Shah and gave him the key to Peshawar in 1741 when he visited the city. This signaled the end of the Mughal Empire in Peshawar. According to an earlier legend, the foundation of the gate was laid down in the latter half of the 16th century in the presence of renowned personalities of the time, Sheikh Kaka Sahib and Akhund Derwaza Baba. It is also recorded that Arbab Mustajab Khan, being the representative of the Mughals, settled disputes amongst the Ghori Khel tribes in the balconies of the building.
When the Mughals arrested Khushal Khan Khattak, Arbab Mustajab Khan, secured his release from the dungeon, through his personal efforts and kept him as a guest in the castle. On the orders of the ruler of Peshawar, when Khushal Khan Khattak was sent to Delhi, Mustajab Khan also accompanied his friend. This verse by Khushal Khan Khattak says: I was accompanied on my journey To Hind by Mustajab, Being a Khan, a Malik and an Arbab The original name of this site was Kotla Mustajab Khan. It was renamed as Kotla Mohsin Khan due to the owner's close relationship with Mustajab Khan during the reign of Afghan King, Ahmad Shah Durrani. During the siege of Peshawar in 1830s, the Sikhs also burnt this site and it was later refurbished.
The gate and minarets of Kotla Mohsin Khan are historical landmarks of the 16th- and 17th-century "Roshnai period". Bayazid Ansari alias Pir Rokhan started his religious and political movement against the Mughal emperor Akbar from this site. Allah Dad Doshani alias Rashid Khan constructed minarets at this site to conduct judicial duties. The "Village Kotla Mohsin Khan was founded by the forefathers of Afghan Mohib Khel family, some four to five centuries ago or even before. Afghan Mohib Khel is one of the famous castes and sects of Tapa Mohmand of the Pushtoon tribe of district Peshawar. The individuals of Afghan Mohib Khel family were and are respectable people and every member of the family with little or great social status called himself Malik.