The History of Diwali is related to Hindu mythology.

History & Origin of Diwali

The history of Diwali is related to the Hindu Purana(s). Hindus believes that whenever the power of evil increases in the world, Vishnu comes down to earth in a different form to defeat evil. These forms are called Avataras. Krishna and Rama are the popular Avataras of Vishnu. Goddesses accompany gods. Diwali celebrations are especially a time for telling stories about Vishnu and his wife Lakshmi, and about Krishna, Rama and his wife Sita.

The Story of Rama and Sita
Lord Rama was the seventh incarnation of Lord Vishnu. He was a great warrior King who was exiled by his father Dashratha, the King of Ayodhya, along with his wife Sita. Lord Rama returned to his Kingdom Ayodhya after 14 years of exile, in which he put an end to the demon Ravana. After this victory of Good over Evil, Rama returned to Ayodhya.The people welcomed them by lighting rows of clay lamps. Great celebrations were held and everyone was happy for Rama to be the King of Ayodhya. So, it is an occasion in honour of Rama's victory over Ravana.

Krishna and The Mountain
According to Hindu mythology, Lord Krishna persuaded the people of Gokula to worship the mountain Govardhan instead of God Indra . Indra sought revenge. He sent thunder and torrential rain down on the village. Lord Krishna saved the villagers by lifting the top of the mountain with his finger .The people gathered under it until the storm passed away. The offering of food to God on this day of Diwali is a reminder to Hindus of the importance of food and it is a time for being thankful to God for the bounty of nature.

Lord Krisna and Narakasur
When people got the news of destruction of Narakasur by Lord Krisna on the day before Diwali , they celebrated Diwai .

The Story of King Bali and the Dwarf
The Diwali origin also lies in the story of Lord Vishnu and King Bali. Vishnu came to earth in the form of a dwarf. King Bali was send to the underworld.

Swami Dayananda Saraswati
Diwali history says Swami Dayananda Saraswati, that leonine sanyasin who was one of the first to light the torch of Hindu Renaissance during the last century, passed into Eternity on this day. The lights kindled on this day also mark the attempt of their followers to immortalize his sacred memories. The passage of these great men have indeed brought the national-cum-spiritual tradition of Diwali right up to modern times.