Tamil Dakhnis were formed due to the new subdivision that emerged in the early twentieth century. Their emergence was the result in the late nineteenth century of the migration of Muslims from Thanjavur to Vaniyambadi and elsewhere in the north Arcot district. This migration was caused in part by famine and inter-caste conflict, but it was also encouraged by the expansion of the bark required for the tanning process. Even to this day, many Muslim families here are said to be known by their places of origin in Thanjavur.

This migration brought Tamil Muslims into a region already populated by Dakhnis. It was in Arcot that the most interaction between Dakhnis and Tamil Muslims occurred. Dakhni Urdu culture now increasingly influenced Tamil Muslims in their customs and traditions, language and politics. Indeed, Tamil Muslims of the Arcot region were to make a major contribution to Urdu literature in the decades that followed. From the 1920s onwards and to the present day, Tamil Dakhnis in North Arcot exercised a major influence on Muslim society.

While the Tamil Dakhni elite were sought after for their philanthropy and patronage, their social position inside the larger Muslim society was undesirable. Dakhni Urdu Muslims never accepted them as `pure Muslims` or `pure Urdu speakers`. Indeed, they were often referred to derisively by the Dakhnis as `Urdu Labbais` to indicate a lower rank than the `pure` and endogamous Urdu Muslims. This Brahminism of the Urdu Muslims were observed by the census commissioners in the year 1911, when they told that the fluent use of `Urdu` was `regarded among Muslims as and indication of social and even religious status`. The Urdu-speaking Muslim, they said, adopted `a somewhat Brahminical attitude towards the Dravidian fellow-believer who still clings to his old vernacular`. Nor were these Tamil Dakhnis were a source of amusement. They were known as kiari-pattanis, literally spinach Pathans, or in other words, a rather mushy and adulterated version of the Pattani or Urdu Muslim.

However, whatever the amusement that the Tamil Dakhnis may have provided, the profits of the leather trade gave them considerable political influence in Tamil Nadu. They invested extensively in Muslim education. In this effort, they drew in different groups of Muslims in south India, including those from Malabar and south Kanara. The Tamil Dakhnis transformed the mercantile capital of the Arcot region into cultural capital and contributed to the formation of Muslim identities in modern Tamil Nadu.

The emphasis on building institutions for the education of Muslims was for traditional religious teaching as well as Western English education. Important madrasas such as the Baqiath-us-Salehath (Vellore), Jamalia (Chennai), Latheefia (Vellore), and Jamia Darussalam (Ambur) were established in the late nineteenth and early twentieth centuries. After the Deoband movement in the late nineteenth century, there was an increase in the number of madrasas and maktabs imparting religious knowledge to Muslim children and youth.