The Maratha Empire had brought an end to the Mughal Empire in the Deccan in the 18th century and the regions of India under Mughal rule had either been absorbed by the Marathas or declared independence and turned into smaller kingdoms. The Marathas installed Shah Alam II in the throne in 1772, under the protection of the Maratha general Mahadaji Shinde and maintained suzerainty over Mughal affairs in Delhi. The East India Company became the dominant political and military power in mid-nineteenth-century India. Outside the region controlled by the Company, hundreds of kingdoms and principalities, fragmented their land. The Emperor was respected by the Company and had given him a pension. The Emperor permitted the Company to collect taxes from Delhi and maintain a military force in it. Bhadur Shah never had any interest in statecraft or had any "imperial ambition". After the Indian Rebellion of 1857, the British exiled him from Delhi.

Bahadur Shah Zafar was a devout Sufi. He was regarded as a Sufi Pir and used to accept murids or pupils. The newspaper Delhi Urdu Akhbaar described him as "one of the leading saints of the age, approved of by the Divine court." Before his accession, he lived like "a poor scholar and dervish", differing from his three royal brothers, Mirza Jahangir, Salim and Babur. In 1828, a decade before he succeeded the throne, Major Archer said that "Zafar is a man of spare figure and stature, plainly apparelled, almost approaching to meanness." His appearance is that of an indigent munshi or Teacher of languages".

Zafar was portrayed in the play 1857: Ek Safarnama set during the Indian Rebellion of 1857 by Javed Siddiqui. It was staged at Purana Qila, Delhi ramparts by Nadira Babbar and the National School of Drama Repertory company in 2008. A Hindi-Urdu black and white movie, Lal Quila (1960), directed by Nanabhai Bhatt, showcased Bahadur Shah Zafar extensively. A television series titled "Bahadur Shah Zafar" aired on Doordarshan in 1986. Ashok Kumar played the lead role in it.

Respecting Hodson's guarantee on his surrender, Zafar was not sentenced but exiled to Rangoon, Burma, where he died in November 1862 at the age of 87. His wife Zeenat Mahal and some of the remaining members of the family accompanied him. At 4 AM on 7 October 1858, Zafar along with his wives, two remaining sons began his journey towards Rangoon in bullock carts escorted by 9th Lancers under command of Lieutenant Ommaney.

In 1862, at the age of 87, he had reportedly acquired some illness. In October, his condition deteriorated. He was "spoon-fed on broth" but he found that difficult too by 3 November. On 6 November, the British Commissioner H.N. Davies recorded that Zafar "is evidently sinking from pure despitude and paralysis in the region of his throat". To prepare for his death Davies commanded for the collection of lime and bricks and a spot was selected at the "back of Zafar's enclosure" for his burial. Zafar died on Friday, 7 November 1862 at 5 am. Zafar was buried at 4 pm near the Shwe Degon Pagoda at 6 Ziwaka Road, near the intersection with Shwe Degon Pagoda road, Yangon. The shrine of Bahadur Shah Zafar Dargah was built there after recovery of its tomb on 16 February 1991. Davies commenting on Zafar, described his life to be "very uncertain".

Hakim Ahsanullah Khan, Zafar’s most trusted confidant and both his Prime Minister and personal physician, had insisted that Zafar not involve himself in the rebellion and surrender himself to the British. But when Zafar ultimately did this, Hakim Ahsanullah Khan betrayed him by providing evidence against him at the trial in return for a pardon for himself.