Jamrud is compound of two words; ‘Jam’ and ‘Rud’. Jam or Jamshed is a legendary king of Iran who is mentioned in Shahnama of Ferdosi. Rud means river in Farsi. So Jamrud means the river of Jamshed.
“I had the pleasure of going up to Ali Masjid in the Khyber in the spring of 1887, and on my way there, of seeing the fort of Jamrud. While there, I heard the tradition, that the fort was connected with the name of King Jamshed of the Peshdadian dynasty of Persia. The late Professor James Darniesteter, when he was in India, visited the place, when at Peshawar a short time before me, and he records as having heard the same tradition.” 
There is a place 38 miles from Ghazni who is also named Jamrud. The inhabitants of that Jamrud are Hazaras.
Jamrud is first mentioned as Jam in his memoirs. He writes, “Crossing Khyber in a march or two, we dismounted at Jam”……..”we broke up our plan of crossing the Sind-water into Hindustan, marched from Jam, forded the Bara-water, and dismounted not far from the pass through the Muhammad-mountain” 
Jamrud was a Mughal military outpost and there was a Mughal fort built here. The present mud fort stands on a high mound, it seems that some sort of construction was in existence here. Moorcraft, who came here before the construction of the modern fort, writes: “The plain terminated at the foot of the Khyber range. It appeared to have been formerly a place of importance, from the number of broken stone walls scattered about, and some large tanks, one of which was sixty yards square.” 
The foundation of the present fort was laid by Hari Singh in 1836 and was named Fattehgarh.
1- Asiatic Papers, Vol-II, 1917, p-264
2- “Baburnama”, translated into English by A.S.Beveridge, pp.229-230
3- “Travels in the Himalayan provinces of Hindustan and the Panjab; in Ladakh and Kashmir; in Peshawar, Kabul, Kunduz, and Bokhara”, William Moorcroft, p-345
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