Dunbar is located along Interstate 64 in Kanawha County west of Charleston. It stands on the banks of the Kanawha River in a rich river bottom previously valued for truck gardening and other agricultural purposes, at an elevation of 603 feet above sea level. The original tract, surveyed by Samuel Lewis in 1774, was once part of George Washington's extensive land holdings in Western Virginia. The burial mound at nearby Shawnee Park suggests a rich prehistory.

Commercial wine production was undertaken within present Dunbar in the 19th century. The picturesque ruins, now part of Wine Cellar Park, were acquired by the city in 1974. The wine cellars were added to the National Register of Historic Places in 1978.

The present city was born during the rapid economic development of the Kanawha Valley during the early 20th century. Dunbar was laid out in 1919 by the Dunbar Development Company and incorporated in 1921. It was named for Dunbar Baines, a Charleston banker and lawyer. The Dunbar-South Charleston bridge, an important connection to the south side of the Kanawha River, opened as a toll bridge in 1953.

Dunbar is a suburb of Charleston. Early industries included Gravely Tractor, Dunbar Flint Glass, and Fletcher Enamel, a producer of metal kitchenware. Today, Dunbar is primarily a residential and commercial community. Its people work in Charleston, at West Virginia State University in neighboring Institute, and in the chemical and other industries in this heavily industrialized area. The population of Dunbar was an estimated 7,851 in 2012.