Built in 1465 during the reign of Jahan Shah, the ruler of the Qara Qoyunlu dynasty, the mosque was part of a larger complex that included a theological school, library, and mausoleum. It was one of the most magnificent structures of its time, reflecting the artistic and architectural advancements of the Timurid and Persian styles.

The mosque earned its name from the stunning blue tiles that once adorned its entire exterior and interior, featuring elaborate geometric patterns, floral motifs, and calligraphic inscriptions. These tiles were designed with remarkable precision, making the mosque an outstanding example of Persian tilework.

However, a devastating earthquake in 1779 caused severe damage, leaving much of the mosque in ruins. For over a century, it remained in a dilapidated state until restoration efforts began in the 20th century.