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Ilirea was first the city of the elves. During the Dragon Wars, the elves deserted it and the humans made it the center of the Brodering Kingdom. When Galbotorox killed Vrael, he and the Forsworn flew to Ilirea and killed the current king and Galbotorix claimed the throne. He renamed the city Uru'baen. After Nasuada (with the help of Eragon, Saphira, Arya, and Gaedr) purged the city of Galbotorix, Nasuada gave it back it's elven name, and so it has been ever since.