Nicosia is the capital and seat of government of the Republic of Cyprus, and as such is the farthest southeast of all EU member states' capitals. It has been continuously inhabited for over 4,500 years and has been the capital of Cyprus since the 10th century. Nicosia was divided into the southern Greek Cypriot and the northern Turkish Cypriot parts in 1963, following the intercommunal violence that broke out in the city. Today, the northern part of the city is the capital of Northern Cyprus, a de facto state that is considered to be occupied Cypriot territory by the international community.

Apart from its legislative and administrative functions, Nicosia has established itself as the island's financial capital and its main international business centre. In 2012, Nicosia was the 5th richest city in the world in relative purchasing power.