The Undercity is the capital city of the Forsaken undead of the Horde. It is located in Tirisfal Glades, at the northern edge of the Eastern Kingdoms. Far beneath the ruined capital city of Lordaeron, the royal crypts have been turned into a bastion of evil and undeath. Originally intended by Prince Arthas to be the Scourge's seat of power, the budding "Undercity" was abandoned when Arthas was recalled to aid the Lich King in distant Northrend. In Arthas's absence, the Dark Lady, Sylvanas Windrunner, led the rebel Forsaken to the Undercity, and claimed it for her own. Since taking up residence, the Forsaken have worked to complete the Undercity's construction by dredging the twisted maze of catacombs, tombs, and dungeons that Arthas began.
The Undercity was so named many years before the Forsaken claimed it as their own. Far beneath the palace of Lordaeron, the Undercity held the ancient crypts and catacombs of Lordaeron's royalty, as well as the city's dungeons and sewers. Although the Undercity was only intended for prisoners and the dead, the poorest of the Lordaeron people lived within. When the Alliance captured Orgrim Doomhammer, they sent him to the Undercity; sometime later he managed to escape and wandered for many years afterwards.
Lordaeron's capital city stood for centuries, a monument to humanity's might. In the Third War, Prince Arthas slew his father, King Terenas, in Lordaeron's throne room and ransacked the city. He planned to use Lordaeron as his capital on this continent and ordered his minions to expand the catacombs beneath the city. Then the Lich King summoned Arthas to Northrend and the work was left uncompleted
During Arthas' exodus, Sylvanas Windrunner broke free of the Lich King's control and took many banshees and other undead with her. With Varimathras' assistance she defeated the dreadlords that controlled the city and set her newly dubbed Forsaken to finish Arthas' job in the dungeons. The Forsaken carved the Undercity and now rule the surrounding countryside.