It is named after the Mughal governor of Peshawar Nawab Mahabat Khan who served under Emperors Shah Jehan and Aurangzeb and who was the grandson of Nawab Dadan Khan (a former governor of Lahore). The name of the Masjid and the governor who built is often mispronounced as 'Muhabbat Khan' ('Love Khan') by the public majority instead of the correct pronunciation 'Mahabat Khan' ('Awe-inspiring Khan').
The masjid was built in 1630. Its open courtyard has a centrally-located ablution pool and a single row of rooms lining the exterior walls. The prayer hall, flanked by two tall minarets, occupies the west side. According to the turn-of-the-century Gazetteer for Pakhtunkhwa, the minarets were frequently used in Sikh times 'as a substitute for the gallows'. Mahabat Khan masjid at night The interior of the prayer hall is sheltered beneath three low, fluted domes and is eloquently painted with floral and geometric designs.