The principality has been ruled by the Grimaldi family since 1297. They were stripped of their power during the French Revolution, but in 1861 France restored Monaco's independence under the rule of the Grimaldis. A customs union followed. No industry of note developed in Europe's second smallest state, but the 1860s saw a pioneering economic revival.

In 1861, the now legendary casino was opened, and a few years later the reigning prince christened the surrounding district "Monte Carlo", which was soon transformed into a glamorous centre of luxury tourism. The railway connection with France, established in 1868, primarily served tourism, as did the cogwheel railway that from 1894 to 1932 rattled up the steep hill from the city limits to the village of La Turbie. Last but not least, the annual Grand Prix, which, since the first race in 1929, past the former old gasworks in the hairpin bend called the "Gazomètre". The Grand Prix, is one of the Principality’s most popular tourist events attracting a huge amount of public interest. When the course was rebuilt in 1972, the bend was given the more appealing name "Antony Noghès" after the founder of the race track. Apart from tourism, it is finance that drives the economy of the city-state.