The British made Penang a trading hub in the 18th century. This attracted traders, including the Indian Muslim community (which gave rise to the Mamak or Indian Peranakan descendants), to migrate to Penang. The Indian Muslims were very skilled in trade. They were not only experts in culinary arts but also in textiles, retail goods, coffee shops, gold shops, and many others. They were also the ones who traded spices in the Malay Archipelago since the 15th century. This means that curry dishes were brought by the Indian Muslims, and by the 18th century, they made curry with white rice served in a basket (kandar) as a meal for laborers. The term "Nasi Kandar" comes from the practice of hawkers carrying a long wooden pole (kandar) on their shoulders. At both ends of the pole, there were containers hanging with rice and various dishes.

According to history, nasi kandar was originally a breakfast dish before people went to work. This was because laborers, in particular, had to perform heavy physical work. Therefore, they sought a meal to fuel them before starting their daily physical tasks. In the past, nasi kandar was a staple food for manual laborers. There is a story that states nasi kandar was a quick and easy daily meal for the workers at Weld Quay Port in Penang, which was established as the main international port in Penang. The rice used for nasi kandar typically has a distinctive aroma and was placed in a wooden container about three feet high. A mixture of curry gravy was poured over the rice, known as "banjir" gravy, which added a variety of flavors to the dish and made it very appetizing.

Nasi kandar is a balanced meal as it serves rice (carbohydrates), curry gravy with eggs, chicken, fish, or beef (protein), and often okra or fresh green chili (fiber). The laborers who bought nasi kandar would eat it under trees before starting work. This dish became popular in Penang and has been passed down through generations. Some vendors sold it using bicycles or three-wheeled motorcycles until local authorities provided shops for these vendors to continue their business over time.

Today, nasi kandar is loved by people all over Malaysia. It has also been enhanced with a variety of delicious side dishes, such as fish roe, squid eggs, hotam beef, honey chicken, onion chicken, curry liver, crispy bitter melon, fried shrimp or squid, papadom, and more. Similarly, the nasi kandar that once cost five cents is now priced at RM50 per plate!