Clan Farquharson, of Celtic origin, derives from Farquhar, fourth son of Alexander "Ciar" Mackintosh of Rothiemurchus, 5th Chief of Clan Shaw. A grant of arms made by Lord Lyon in 1697 stated that John Farquharson of Invercauld was lawfully descended of Shaw son of MacDuff, Thane of Fife whose successors had the name Shaw until Farquhar Shaw, son to Shaw of Rothiemerchus, Chief of the whole name came to be called Farquharson. Thus the Farquharsons branched from Clan Shaw. Farquhar settled in the Braes of Mar and was appointed baillie or chamberlain thereof.

It was Donald Farquharson who married Isobel Stewart, heiress of Invercauld and their son Finlay Mór, 1st of the House of Farquharson of Invercauld, who gave to the Farquharson Chiefs their style MacFionnlaidh (siol Fhionnlaidh or descendents of Finlay).

At the age of 60, Finlay Mòr accompanied the Earl of Huntly to the Battle of Pinkie in 1547 as the Royal Standard Bearer. As the army descended toward the sea he was killed by a cannon ball fired from one of the enemy ships. His body lies interred in the church yard of Inveresk. The place is known to this day as the "Lang Highlandman's Grave." His widow, Beatrix Garden, also has a claim to remembrance having been an outstanding performer on the little harp or clársach. Queen Mary presented one of these instruments to her and this instrument is now preserved in the National Museum of Antiquities as one of two surviving examples of the musical instrument which Celtic Scotland shared with Ireland before the music of the bagpipe had achieved its full popularity and sophistication.

The Farquharsons having moved onto their Deeside inheritance became vassels of the Earldom of Mar. In the early 17th century they were able to purchase feu charters to their lands and after the attainder of the Earl of Mar, who led the Jacobite rising of 1715, they held these directly of the Crown. Today the Castle of Braemar, which was built in 1628 by James Erskin, Earl of Mar, is owned by Captain Alwyne A. C. Farquharson.