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Phayao was founded in 1096 as a small city-state kingdom. In the 13th century it had gained enough importance to be treated as an equal partner alongside King Mengrai's Kingdom of Lanna and the then powerful Sukhothai kingdom. However in 1338, the town was captured by King Phayu of Lanna who incorporated Phayao into the Kingdom of Lanna.<br/><br/> During the Burmese domination of Lanna the city was deserted. By 1897 the town, newly invigorated, had become part of the northern Thai province of Chiang Rai. On 28 August, 1977 Phayao became its own province.