The development of the sitar, in general terms, is really no mystery. However, it is surprising that there have arisen theories and stories that show a total disregard for historical accuracy.
But the earliest origins of these instruments are irrelevant. The sitar as we think of it today developed in the Indo-Pakistan subcontinent at the end of the Mogul era. It is also said that it evolved from the Persian lutes that had been played in the Mogul courts for hundreds of years. The "Sangeet Sudarshana" states that the sitar was invented in the 18th century by a fakir named Amir Khusru, he was the 15th descendent of Naubat Khan, the son-in-law of Tansen. It is said that he developed this instrument from the Persian sehtar.
The job of continuing the sitar tradition fell to Amir Khusru's grandson, Masit Khan. He was one of the most influential musicians in the development of this instrument. He composed numerous slow gats in the dhrupad style of the day. This style, even today, is referred to as Masitkhani Gat. The Masitkhani gats were further popularized by his son, Bahadur Khan. Masit Khan was a resident of Delhi, therefore masitkhani Gats are sometimes referred to as Dilli Ka Baaj.
Another important person in the development of sitar music was Raza Khan. Raza Khan was also a descendent of Tansen and lived in Lucknow around 1800-1850. Raza Khan was also known as Ghulam Raza. He developed the fast gat known as Razakani gat.
Amrit Sen and Rahim Sen were two very important personalities. They modified the tuning and stringing of the instrument and introduced numerous new techniques to the instrument.