The name it is thought derives from MEOLC, the old English word for milk and HAM, meaning a village. The town grew around a ford across the River Avon and at the time of the Norman Conquest, was a royal estate. In the Doomsday Book Melksham was described as having 8 mills, 130 acres of water meadow and 8 leagues of pasture in length and breadth. 189 landholders, 19 plowmen and 35 serfs, making a population of a couple of hundred. Melksham forest adjoined the farmland which, combined with Chippenham forest covered 33 square miles. The Constable of Devizes Castle administered the forest; it spread from Calne in the east to Semington in the west.

King John visited Melksham Forest in the early part of the 13th century to enjoy his favorite sport of hunting. In 1220 oaks from the forest were used in the construction of choir stalls for the new Salisbury Cathedral. Melksham also had a connection with the cathedral, in that part of the parish was endowed to support its Canons. In 1257 Henry III gave the main part of the manor to the Abbey of Amesbury. From then on, cattle, cheese and fleece were sent from Melksham across the plain to the Abbey until its dissolution in 1539.

Melksham was considered important enough by 1219 to be granted a Charter to hold a market every Friday and a fair on Michaelmas Day. Later the market was transferred to Tuesdays, and in 1491 the Prioress of Amesbury obtained a Charter for a two day fair in July. In the late 19th Century farm produce was sold on the first day of the fair. Horses were tethered down King Street and in the Market Place as far down as Bank Street. The second day a fun fair was held. The Home Secretary wound up the fair in 1910. The market continued on alternate Tuesdays, with Trowbridge but ended with the beginning of the Second World War. Recently there has been a move to resurrect the street market.

Melksham was well established as a busy weaving town by the mid 14th century, white broad cloth being the main product. This provided work for spinner, weavers, fullers and shearers. The wool came from North Wiltshire and the Cotswolds. The finished cloth was sent to Blackwell Hall in London and from there was dispersed all over England and the Continent. The Civil War disrupted the wool trade in the 17th century but it recovered and started making coloured cloth, with dyehouses near the Town Bridge.
It was impossible for weavers to make a living by 1726, as the piece rate paid for the cloth was cut so low. They made application to the magistrate for relief, but this was refused and troops were sent in to disperse the rioters. These conditions did not improve and in 1739 Henry Coulthurst, a Melksham clothier, had his house ransacked, his furniture destroyed and wool and yarn thrown into the River Avon. His grist and fulling mills were destroyed along with nine cottages. Eventually three ringleaders were caught, tried, found guilty and hanged.
There were several mills along the banks of the Avon, but by 1838 only two remained in business. Both were steam operated and employed just over 160 workers. Matravers Mill was the last working mill and this was auctioned off in 1888. It is now incorporated in part of the Cooper Avon Tyre factory.
Two wool drying houses remain, the Roundhouse in Church Street and an octagonal drying house in Lowbourne.

Following the dissolution of the monasteries, Henry VIII sold the Capital Manor to Sir Thomas Seymour, Lord High Admiral for £28.15s.10d. Before a week was out he sold the entire property, which included Melksham, Woodmarsh, Inmarsh, Bowerhill, Sevenoaks and Berryford to Henry Brounker of Erlestoke for £1,737.5s.10d, who was Member of Parliament for Devizes, Sheriff of Wiltshire in 1558 and knighted in 1555.
Sir Henry Brounker was a founder member of the Muscovy Trading Company, formed to take advantage of the trade with Russia and Persia. Sir Henry Brounker had Place House, a large manor house in the middle of Melksham built for himself. Following his death, his eldest son, Sir William inherited his father's property, became Sheriff of Wiltshire in 1580 and Member of Parliament in 1586. His second son, became Lord President of Munster (Ireland) and was the grandfather to Viscount Brounker, first President of the Royal Society.
John Danvers, of West Lavington bought Place House in 1634. He is notorious for signing King Charles death warrant, though accepting a knighthood from James I. He died in disgrace, being shunned by Royalists and Parliamentarians alike. Place House passed on into the ownership of Isaac Selfe in 1657, a wealthy clothier from Beanacre, and remained in that family until the 19th century. By which time it had gradually fallen into a pour state of repair. In 1859 the house was sold to a building company and was demolished in 1864.

Stagecoaches were passing through Melksham by the early 18th century, carrying passengers from London to Bath, Bristol, Exeter and Devonport. By 1830 there were six coaches each day to London. The Royal Mail and The Emerald calling at The Kings Arms. The Royal Blue and The Regulator at The Bear, and The Old Company's Coach and The White Harte Coach called at both. The four coach horses were changed every ten miles, so these hostelries had ample stabling at the rear. Fares were 24 shillings for those travelling inside the coach and 12 shillings for those travelling on top.

Finance for the repair of the roads were collected at five turnpike gates, at King Street, Shaw, Lowbourne, Atworth and one adjoining Melksham Marketplace.

1812 saw the coming of the Wilts' and Berks Canal. Designed as a feeder for the Kennet and Avon Canal. It ran from Semington, through the centre of Melksham, on to Chippenham and linked to the River Thames at Abingdon. Ther are still traces of the canal in Melksham. The Wharf House at the hump in Spa Road and the remains of a bridge at the junction of Forest Road and Sandridge Road. The canal was abandoned in 1914.

Some local gentry who had made their money in the wool trade, formed the Melksham Spa Company in 1813. The names were Awdry, Long, Methuen and Phillips. With a capitol of 7,000 guineas, the intention was to exploit the Chalybeate Spring discovered in 1770 to the south of Melksham. A well, over 300 feet deep was sunk and six large semi detached boarding houses and a hotel were built. The Spa was intended to be a rival to Bath, but after a few years of prosperity, rapidly declined.

Throughout Great Britain, the 1840's saw the rapid growth of the railways. The Great Western Railway running between London and Bristol, via Swindon, Chippenham and Bath was completed by June 1841. This railway was seen as very profitable so a committee was formed, chaired by Walter Long of Rood Ashton to raise money to build a line from Chippenham to Salisbury via Melksham, Trowbridge, Westbury and Warminster with branch lines to Bath and Frome. To be known as The Wilts' and Somerset Railway and designed by I. K. Brunel, the land was acquired, the rails laid and stations built, all for 1 million pounds. In February 1846, workshops were erected at Melksham and on September 5th 1848 the line was opened to the public. Unfortunately, preceding monopolies prevented the line actually entering Chippenham so passengers had to alight at Thingley. The problem was solved in 1850 by amalgamating The Wilts' and Somerset Railway with the Great Western Railway.

Industry grew in Melksham during the 19th century. Charles Maggs bought a former cloth factory adjoining Spa Road in 1803 and used it for making rope, matting and tarpaulins. A subsidiary factory was built at Alleppey, southern India and two ship loads of matting coir were sent to Melksham each month. The business survived two World Wars but eventually declined.
Charles Maggs, grandson of the rope maker of the same name originated The Wiltshire United Driaries at West End Farm on Semington Road, beginning as a collection depot and butter factory. In 1897 it amalgamated with The North Wilts' Dairy Company and in 1900 moved to a 3 acre site next to the Avon Bridge. Eventually becoming part of The United Group and transferred to Wootten Bassett in the 1980s. The dairy buildings are now in use as a retail park.
Another family business established in the middle of the 19th century was Hurn Brothers, a timber mill near the railway station. After 1900 the firm moved to The Ark Saw Mills across the river from the United Dairies, becoming the biggest manufacturer of garden trellis in England. But now unfortunately the firm is long gone.
In 1802, Messrs. Sawtell & Sons had a factory in Old Broughton Road, dealing in straw. Ten years later they began purifying feathers for pillows and eiderdowns. Feathers were imported from all over the world, and by the 1960s was one of the largest feather firms in the country. In later years feathers were replaced with manmade fibres. Now, where the factory stood is a housing estate named Weavers Croft.
A small industrial and agricultural firm, which originated in a workshop at the corner of Union Street and Bank Street was growing in size when Mr. C. J. Spencer joined the company in 1878. It was moved to Beanacre Road in 1903 where it continued to grow. The firm was taken over by Elliot Automation in 1962 and later become GEC Mechanical Handling. The business ceased in 1990 and part of the site is now a retail outlet.
Cooper Avon Tyres, the largest employer in the town, started as a rubber company in 1885 at Limpley Stoke. The premises in Melksham were purchased in 1890 and now cover more than 28 acres. There was a fine house and garden on an island in the middle of the river but when the weir was built to stop flooding, the house was demolished, the area filled in and is now part of the Avon car park.
The large silos that stood by the large roundabout on the Bradford on Avon road were built in 1942 to store grain. Spencer's made the original milling machinery. West Midland Farmers who took over a company named The Atworth and District Agricultural Society, which originated at Atworth and later became Wiltshire Farmers Ltd, owned them. The new mills were built during the 1980s and the firm is now known as Countrywide Farmers.