A market town is a middle-sized town where most of the wealth comes from trade, rather than from factories or offices.

Market towns in Europe are very old, but mostly date from the 12th and 13th centuries when more goods were being made. At this time lords and kings saw an opportunity to cash in on this by setting up markets and even setting up new market towns. The markets were a place where the lord could charge for space, and the king could charge for giving a licence (called a charter) to set up the market in the first place.

Many market towns had a market at the centre, often around a market cross. Many markets were close to castle or abbey gates.

Many market towns still survive, with populations of a few thousand up to ten or twenty thousand. But trade cannot make them grow any bigger. During the Industrial Revolution, factories were built in many market towns and the majority of people working in towns became factory workers. These were now industrial, not market, towns because the markets were just a small part of what went on.