The origin of Orakzai tribes has several accounts of which one of the popular version is that in around 10th century AD a Persian prince named, Sikandar Shah was exiled by his father for his mischievous deeds, who came to be referred to as 'Wrakzai (lost son). Sikandar traveled to the sub-continent India and ultimately reached Kohat, where he became a courtier of the king. One day, the king sent him on an expedition to punish the inhabitants of Tirah, who were involved in looting travelers. The prince ultimately settled in that area and later on became the king. His descendants were known as Orakzais.

After independence from British, Orakzai Agency became part of Frontier Region Kohat District and was administered as Frontier Region of Kohat District by the Deputy Commissioner, Kohat. Responding to long standing demand of the Orakzais, then President of Pakistan Zulfiqar Ali Bhutto announced the creation of Orakzai Agency in 1973 and formally inaugurated on 1st December, 1973 during a grand Jirga at Samana. The headquarters of the agency are at Hangu District, but tehsil-level headquarters are situated in Kalaya and Ghiljo.