Ethiopia has seen human habitation for longer than almost anywhere else in the world, possibly being the location where humans evolved.

Evidence of Naqadan contacts include obsidian from Ethiopia. The first records of Ethiopia proper come from Egyptian traders from about 3000 BC, who refer to lands south of Nubia or Cush as Punt and Yam. The Ancient Egyptians were in possession of myrrh (found in Punt) as early as the First or Second Dynasties, which Richard Pankhurst interprets to indicate trade between the two countries extant from the beginning of Ancient Egypt's beginnings. J. H. Breasted posited that this early trade relationship could have been realized through overland trade down the Nile and its tributaries (i.e. the Blue Nile and Atbara). The Greek historian and geographer Agatharchides had documented ship-faring among the early Egyptians: "During the prosperous period of the Old Kingdom, between the 30th and 25th centuries B. C., the river-routes were kept in order, and Egyptian ships sailed the Red Sea as far as the myrrh-country."

The first known voyage to Punt occurred in the 25th century BC under the reign of Pharaoh Sahure. The most famous expedition to Punt, however, comes during the reign of Queen Hatshepsut probably around 1495 BC, as the expedition was recorded in detailed reliefs on the temple of Deir el-Bahri at Thebes. The inscriptions depict a trading group bringing back myrrh trees, sacks of myrrh, elephant tusks, incense, gold, various fragmented wood, and exotic animals. Detailed information about these two nations is sparse, and there are many theories concerning their locations and the ethnic relationship of their peoples. The Egyptians sometimes called Punt land Ta-Netjeru, meaning "Land of the Gods," and considered it their place of origin.

There is some confusion over the usage of the word Ethiopia in ancient times and the modern country. The ancient Greeks used the word (Αιθιοπία) to refer to the peoples living immediately to the south of ancient Egypt, specifically the area now known as the ancient Kingdom of Kush, now a part of modern Nubia; modern usage has transferred this name further south to the land and peoples known in the late 19th and early 20th century as Abyssinia[citation needed]. The 1911 Encyclopedia Britannica states the connection between Egypt and Ethiopia is at least as early as the Twenty-second dynasty of Egypt was very intimate, and beginning with Piye, a ruler of the Twenty-fifth dynasty, occasionally the two countries were under the same ruler. The capital of these two dynasties, however, was in the north of modern Sudan, at Napata. It is now known that in ancient times the name Ethiopia was used to refer to the nation based in the upper Nile valley south of Egypt, also called Kush, which in the 4th century CE was invaded by the Axum from the highlands close to the Red sea. Reference to the Kingdom of Aksum designated as Ethiopia dates as far back as the first half of 4th century since inscription of Ezana Habashat (the source for "Abyssinia") in Ge'ez, South Arabian alphabet, is translated in Greek as "Aethiopia".