Following the death of Aurangzeb, Prince Muazzam declared himself emperor and assumed the title of Bahadur Shah. Prince Alam Shah had also declared himself commander of the armed forces. The decisive battle between the two took place in Jajuan, near Agra, on June 10, 1707, where Bahadur Shah emerged victorious. Guru Gobind Singh had actively involved himself planning the strategy of the battle. After the battle, the emperor went to Agra and Guru Gobind Singh returned to Delhi, and spent leisure time there till the rainy season ended.

At this point of time, the Mughal emperor and the Guru shared an amicable relationship. However, in spite of this, the Guru chose not to visit the emperor in Red Fort, as that would have required observing the court etiquette and Sikhs had been forbidden from bowing before the emperor.

It is at the site of Gurdwara Damdama Sahib that the emperor and the Guru had a number of meetings. It seems that some broad understanding had been reached between the emperor and the Guru for punishing Vazir Khan, the viceroy of Sirhind, at whose instance two younger sons of the Guru had been bricked alive at Fatehgarh Sahib. The relationship between the Guru and the emperor was cordial and the meetings were held in a relaxed atmosphere.

They both used to entertain each other here with martial sports. Soldiers from both Sikh and Mughal armies would show their prowess in horsemanship, personal combat and the like. The Yamuna bed at that time extended right up to the spot where the horses and elephants of the Mughal army used to exercise. There also used to be stray cattle grazing there. Once the Guru pointed at one of the elephants of the Mughal army and remarked in a lighter vein that it looked more like a jhota (buffalo). The emperor, however, remarked that it was a fine animal. The Guru again remarked that a bull could take it on. The sakhis have it that the Guru patted a bull before a fight ensued between it and the elephant. At the end of it, the elephant had retreated.

Gurdwara Damdama Sahib is situated near Humayun's Tomb. The area, steeped in history, has a nice ambience. The gurdwara, though not very big, is a fine building in white marble. The ground floor has a square langar hall with an arcaded verandah on its four sides. On top of the hall is the gurdwara. With the arcaded verandah below the gurdwara, the building appears to be floating. The main hall has a beautiful chajja on all four sides. There are four domes in each of the four corners and four typical Sikh domes placed on a rectangular base in the centre of each side. The main dome of the gurdwara is on top of a two-storeyed high platform. Each level has a number of domes and arches. These together with chajjas and cupolas create a beautiful interplay of shapes and sizes. The fa`E7ade on all four sides is the same and rather simple in design. There is a wide parikrama around the gurdwara.

The flight of steps that leads up to the gurdwara is very impressive. There are two landings which enhance the beauty of the approach. The metallic handrails are rather simple. Had these been of the same pattern as that of the parapet of the parikrama, the unity of design would have greatly enhanced the overall beauty of the gurdwara.

This is one of the few gurdwaras which has a garden around it. The lawns are well laid out and there are a number of flowerbeds. There are a few khajjur trees here which indicate that Muslim armies must have camped here.

The Sikhs celebrate Holi as Hola Mohalla. In Anandpur Sahib, Hola Mohalla is celebrated on the day following Holi. However, at Gurdwara Damdama Sahib Hola Mohalla is observed on the same day as Holi. The probable reason for observing Hola Mohalla festivities could be the fact that the Guru had spent a pleasant time here. Nihangs also visit the gurdwara on this occasion. They go in a procession from Gurdwara Damdama Sahib to Gurdwara Bangla Sahib. Many jathas of Dhadis come here on that day and recite waran (songs recalling heroic deeds performed by Sikhs under trying conditions). Apart from the gurdwara's own langar, a number of Sikh organisations serve langar from morning till evening.