Although flag-like symbols have been used by ancient cultures for thousands of years, the origin of flags in the modern sense is a matter of dispute. Some believe flags originated in China, while others hold that the Roman Empire's vexillum was the first true flag. Originally, the standards of the Roman legions were not flags, but symbols like the eagle of Caesar's Xth legion; this eagle would be placed on a staff for the standard-bearer to hold up during battle. But a military unit from Scythia had for a standard a dragon with a flexible tail which would move in the wind; the legions copied this; eventually all the legions had flexible standards — our modern-day flag.

During the Middle Ages, flags were used mainly during battles to identify individual leaders: in Europe the knights, in Japan the samurai, and in China the generals under the imperial army.

From the time of Christopher Columbus onwards, it has been customary (and later a legal requirement) for ships to carry flags designating their nationality; these flags eventually evolved into the national flags and maritime flags of today. Flags also became the preferred means of communications at sea, resulting in various systems of flag signals; see International maritime signal flags.

Beginning in the 17th century, European knights were replaced by centralized armies, and flags became the means to identify not just nationalities but also individual military units. Flags became much more elaborate, and were seen as objects to be captured or defended. Eventually these flags posed too much danger to those carrying them, and by World War I these were withdrawn from the battlefields, and have since been used only at ceremonial occasions.