The Jerusalem Talmud is also known as 'The Talmud of the Land of Israel' and was composed by the Emora'im of Eretz Yisrael who learned in Yeshivas in Tiberias, Zipori, Caesarea and Lod.

After the Mishnah was written, the decrees in the Land of Israel intensified and increased, leading Rav and Shmuel to relocate to Babylon where the Babylonian Talmud was composed. Other Emora'im, however, remained in the Land of Israel for an additional four years, and it was from their teachings that the Talmud Yerushalmi drew its contents.
A strong, continuous connection existed between the two Torah centers of Babylon and the Holy Land which was maintained by Emora'im such as Rabbi Zira and Rabbi Jeremiah – who left Babylon for the Land of Israel – and Rav Dimi and Rabin who emigrated from the Holy Land to Babylon. As a consequence of this strong connection, many references can be found in the Babylonian Talmud regarding the Emora'im of the Land of Israel, such as Rabbi Yochanan and Reish Lakish, while the Jerusalem Talmud would often cite Rav and Shmuel who were among the Emora'im of Babylon.

In sharp contrast to the Babylonian Talmud which was edited by the Emora'im Ravina and Rav Ashi, the Jerusalem Talmud was almost totally un-edited as the harsh conditions and difficult situation in the Holy Land at the time did not permit organized editing. This is why many passages in the Jerusalem Talmud are very short and difficult to comprehend. The completion of the work was done in Tiberias, most probably by Rabbi Yochanan.

The language of the two Talmuds differ; as the Babylonian Talmud was composed in Babylon, it was written in the Babylonian dialect of Aramaic, whereas the Jerusalem Talmud, which was written in the Land of Israel, was written in the western dialect of Aramaic. The difference between the two dialects is quite big and is visible even in the names of the Emora'im: the names 'Yehudah', 'Elazar' and 'Akiva' in the Babylonian Talmud are referred to as 'Yudan' (or Yudah'), 'Lazar' and 'Kivah' in the Jerusalem Talmud.

As the evil decrees in the Holy land intensified, the Yeshivas closed down and many of the Emora'im of the Land of Israel resettled in Babylon and joined the Yeshivas of Abaye and Rava.

The Jerusalem Talmud which we have today was published from the only hand-written copy that was left intact and found in the library of the Leiden University. This copy was written by Rabbi Yechiel ben Yekusiel ben Benjamin the Doctor, of the Anavim family in the year of 5050. Beyond that copy, other copies of the Jerusalem Talmud also exist, however they contain only partial passages from the Talmud.

The orders of the Jerusalem Talmud that we have today are Zera'im, Mo'ed, Nashim and Nezikim. On orders Kodashim and Taharos there are no Jerusalem Talmud commentaries, except for a partial commentary on tractate Niddah.
Most likely, there was a Jerusalem Talmud order of Kodashim that was lost at some point in time. The Rambam in his introduction to the Mishnah writes: "And so did the wise men of the Land of Israel – they composed the Jerusalem Talmud, and Rabbi Yochanan wrote it down. And five complete orders were found, but the order of Taharos was not found and not mentioned neither in the Babylonian Talmud nor in the Jerusalem Talmud, except for tractate Niddah, as I have mentioned."

From the words of the Rambam, it is evident that during his time, there was a written Jerusalem Talmud order of Kodashim.

In the year of 5666, a man by the name of Shlomo Friedlander began collecting various commentaries of the Jerusalem Talmud that referred to or mentioned the lost Kodashim order. He proceeded to add commentaries to these excerpts from his own creative imagination and 'composed' a fake order of Kodashim. He then publicly announced that his brother, who was living in Turkey at the time, had happened upon a rare copy of the lost Kodashim order of the Jerusalem Talmud, and that he planned to publish a copy of it. The news aroused great interest in the Jewish world and in the beginning of 5667 the first forged Jerusalem Talmud tractates of Chullin and Bechoros were published. Alongside the passages of the 'tractates', Friedlander had added a 'commentary' that explained and clarified the tractates. Initially, Friedlander was received with great fondness and even merited the endorsement of the leading Rabbis of his generation. However, after a short period of time, many doubts about the credibility of the tractates began to surface and its reliability was strongly questioned.

Eventually, the Rabbis denounced Friedlander and his forgery. As a counteract Friedlander published several anonymous books which endorsed and praised the 'newly discovered' tractates, and sharply attacked and criticized its opposers.
The controversial matter of the Jerusalem Talmud tractates was brought before Rabbi Yosef Ruzhin – the prodigy of Rugutchov, Rabbi Meir Simchah of Dvinsk – the Ohr Samei'ach and the Gerrer Rebbe – the Imrei Emes. After thoroughly examining and studying the tractates, they unanimously denounced them and announced that they were forged and had no connection whatsoever to the real Jerusalem Talmud. One of the evidences that clearly indicate that the tractates were forged is that in every existing tractate of the Jerusalem Talmud, one Emora who was not mentioned in any other tractate is brought up; however in the forgery no new Emora is mentioned. Eventually, Friedlander broke down and admitted to having forged the tractates.

Throughout the years, many commentaries were written on the Jerusalem Talmud, the most famous of them being that of Rabbi David Frankel of Berlin, who composed a commentary named 'Korban Ha'eidah' to the orders of Mo'ed, Nashim and Nezikin. His commentary did not include the order of Zera'im, and the majority of his commentary on the order of Nezikin was lost. His commentaries were written in the sidebars and resembled the Rashi's commentaries. Rabbi David furthermore added an additional commentary, 'Shayarei Hakorban' which resembled the Tosfos commentaries on the Babylonian Talmud. Rabbi Moshe Margolis also composed several commentaries, called 'Penei Moshe' and 'Mareh Moshe' that are very useful when studying the Jerusalem Talmud.

After the great success of the Daf Hayomi framework, initiated by Rabbi Meir Shapira of Lublin, in which one learns one page of the Babylonian Talmud every day, the Gerrer Rebbe – Rabbi Simchah Bunim Alter - announced the addition of one page of Jerusalem Talmud every day at the sixth Knessiah Gedolah convention of Agudath Yisrael in the year of 5740. The cycle of the Jerusalem Talmud Daf Hayomi takes a little over four years to complete. The first cycle started on the 15th of Shevat, 5740.