Cloud City is located on Bespin. It owns a Tibanna Gas mining operation. Sometime during Emperor Palpatine's rule, the city came under the leadership of Lando Calrissian. Because Tibanna Gas was highly coveted by the Empire, Lando always feared discovery and takeover by the Empire. Han Solo, Chewbacca, Leia Organa, and C-3PO came to Cloud City to have the Millennium Falcon repaired after escaping the Empire following the Battle of Hoth using a feint. Unfortunately, Boba Fett, who saw Obi-Wan Kenobi pull a similar feint on his father, saw the feint for what it was and after the Falcon showed itself was able to deduce whare they were headed and sent his report to Death Squadron, Darth Vader's personal armada. Thanks to having functional hyperdrives, Death Squadron arrived before the Falcon and Vader made a deal with Lando; if he helped them nab Luke Skywalker and his friends, he would leave Cloud City in peace. Lando agreed to the deal and the trap was sprung; Han and his friends were captured by Vader and used as bait to lure Luke into a trap. Luke arrived and faced Vader in a duel and was defeated. All seemed lost for the Rebels until Lando rescued them and helped them escape.
After the Empire's Defeat in Return of the Jedi the Citizens of Cloud City are seen Celebrating.