Agrabah is an ancient city-state located somewhere in the Middle-East.
Agrabah was founded by the kindly merchant Hamed in Ancient Times, despite the interference of Abnor Mal and his time-travelling descendant, the thief Abis Mal. It became a flourishing land of trade and of magic, ruled by a line of sultans descended from Hamed. Through an unknown series of circumstances surely involving the Genie whom Aladdin (the last known Sultan's son-in-law) had befriended, Agrabah ended up transplanted in modern times.
Agrabah is built around the Palace, the lavish residence of the Sultan, which is surrounded by gardens. The city outside the palace walls is somewhat less luxuous, although it is certainly a sight; it is home to many poor people, but few unhappy ones. Agrabah is known for its large daily market, a section of which deals in magical and otherwise shady artifacts.