This place is situated close to the birth place of Guru Ram Das in Chuni Mandi, opposite Multani Muhalla. When Guru Amar Das visited Lahore, he sanctified this place with his holy presence. The fifth Guru, Guru Arjan Dev Ji also stayed at Baoli, Dabbi Bazar when ever he was in Lahore. The sangat got a (baoli) built at this place. A rostrum (thara) still stands as a remenant but the baoli has been desecrated after the partition.

Gurdwara Sri Baoli Sahib Lahore was built here in 1599 AD when Bhai Chajju Bhagat came along with a Pathan to pay his respect to the Guru and put a bag full of 142 gold mohars at the feet of the Guru, requesting him to utilise the money for religious works.

Guru Arjan asked where the money had come from. On this, the Bhagat narrated the story thus: 'My Pathan friend from Bukhara gave me this bag to keep in safe custody but my accountant (munim) forgot to register this money in his ledger (Vahi-Khata) and by the passage of time, I too, forgot all about it. When the Pathan came asking for his money, I refused to pay as my records mentioned nothing of the sort. The case was taken to the official (Hakam) and the Court of governor of Lahore where the pathan lost his case.'

'But while cleaning the shop before diwali, I found the bag. I put extra Rs.100 therein and try to return the same to my friend with apologies. But the Pathan refused to take it as he had lost the case. He couldn't consider the money as his and neither could I take it as mine. That is why we have brought the money to the Guru's darbar'. The Guru appreciated their truthfulness and built a baoli with the money.

The compiler of "Tawarikh-e-Guru Khalsa", giving a historical account of this Gurdwara, writes, "At the time of departure of Guru Sahib to Lahore a big dispute was on. A Pathan of Bukhara was leaving on an expedition and in haste, he entrusted a purse containing 142 gold coins to the charge of Chajjoo Bhagat. He had opened his shop just then and his clerk had not arrived as yet. Chajjoo took the purse and placed it in the safe and forgot all about it. The Pathan returned after a lapse of many months and demanded back his money. Chajjoo denied outrightly since there was no entry of this transaction in his account books. The case went to court of governor of Lahore and the Pathan lost the case. It so happened that after a few days. Chajjoo found the purse of Pathan while he was checking and cleaning his safe. He immediately went to the Pathan with his purse as well as a gift of a shawl and apologised. The Pathan refused to accept the purse saying that he had lost his claim and as such' had no right over it. When both of them refused to accept the money, they decided to go to Guru Arjan Sahib Ji in Samvat 1616.

Many years later however, at the instigation of Diwan Jaspat Rai, this holy Gurdwara was demolished by Yahaya Khan, the Nawab of Lahore and was turned into the residential quarter.

In Samvat 1685, this baoli was filled with earth. In Samvat 1891, during the reign of Maharaja Ranjit Singh the Baoli was restored when a florist informed him about it. Maharaja Ranjit Singh (in 1834 AD) had a new building erected with a sarovar. Shops were built on all sides as to bring revenue for the management of this Gurdwara. Maharaja Ranjit Singh had a darwaza built near the baoli as a memorial. Bhai Nihal Singh was made responsibe for the Sewa of this place.

In 1903 AD Sri Guru Singh Sabha Lahore started weekly congregations here. When Bhai Attar Singh visited this Gurdwara in 1911 AD, he started the daily recitation of Asa di Var. In 1927 AD the Gurdwara came under SGPC management, but the congregations at the time of Gurpurabs were held by Singh Sabha Lahore. At the time of partition, Bhai Dalip Singh was martyrized here on 11th August 1947.

A rostrum (thara) still stands as a remenant but the baoli has been desecrated after the 1947 partition. This baoli has once again been lost, only a small garden remains with shops around it where the people take rest.

More recently, Gurdwara Sri Baoli Sahib is known as Baoli Bagh as the area has been turned into a leafy garden and park.