Princely states were nominally sovereign entities of the British Indian Empire that were not directly governed by the British, but rather by an Indian ruler under a form of indirect rule, subject to a subsidiary alliance and the suzerainty or paramountcy of the British Crown. They were typically bound by treaty first to the East India Company and later to the British Crown. The precise number of princely states in any given period varies depending on the criteria used to classify them, but there were officially 565 princely states when India and Pakistan became independent in 1947. However, the great majority of these states had contracted with the British viceroy to provide public services and tax collection, and only 21 had actual state governments, with only four being large. These four were Hyderabad State, Mysore State, Jammu and Kashmir State, and Baroda State, and they acceded to one of the two new independent countries between 1947 and 1949. All the princes were eventually pensioned off.

The actual importance of a princely state cannot be read from the title of its ruler, which was usually granted (or at least recognized) as a favor, often in recognition for loyalty and services rendered to the British Raj. Although some titles were raised once or even repeatedly, there was no automatic updating when a state gained or lost real power. In fact, princely titles were even awarded to holders of domains (mainly jagirs) and even taluqdars and zamindars, which were not states at all. Most of the zamindars who hold the princely titles were in fact erstwhile princely and royal states reduced to zamindari by the British EIC. A number of princes were not even acknowledged as such, while the dynasties of certain defunct states were allowed to keep their titles.

In principle, the princely states had internal autonomy, while by treaty the British Crown had suzerainty and was responsible for their external affairs). In practice, while the states were indeed ruled by potentates with a variety of titles, such as Raja, Maharaja, Nawab, Khan, or Nizam, the British still had considerable influence). Many princely states retained some sort of independence until the end of the British Raj and full Indian independence in 1947, a negotiated process that the princes were not directly involved in.