Mere is situated, in a somewhat isolated position, near the county boundary (whence a Saxon term from which derived the town's name) with Dorset and Somerset; its local connections were more oriented towards Shaftesbury and other Dorset communities than those of the interior of Wiltshire. However it also lay on a route between London and Exeter. A number of springs there furnished it with water, whose combining outflow was sufficient to power mills. Scattered settlement of agricultural character is evidenced from the Neolithic period, with an Iron Age fort atop one of the surrounding hills; the Romans showed little interest in the area, but Saxon settlement is evidenced, though dating is vague. At the time of Domesday the manor was a royal estate, and its church is first mentioned in 1091.
A different hill, on the north-western side of Mere, was the site chosen for a castle built in 1253 by Henry III's younger brother Richard, Earl of Cornwall, who had been granted the manor ten years earlier; there was good hunting in the nearby Selwood Forest, but the castle was put up in the context of brewing civil war. It had a commanding view over Mere, which at that time was probably no more than a small village with a dilapidated church. It was likely the wealthy Richard who established a market settlement there, although the accounts of the earldom do not mention the market until 1296/97, when held by Richard's son Edmund; by Edmund's time a market cross had been erected at the western end of the marketplace, replaced in the fifteenth century by a market house that accommodated stalls on the ground floor and duchy court on the upper. No licence was recorded for this a king's brother perhaps feeling one unnecessary. However, the hundredal enquiry of 1275 brought forth a complaint from Shaftesbury, a royal borough in Dorset, that the earl's market was detrimental to its own, to the value of 3s. annually; the Shaftesbury jurors made similar charges against markets at Tisbury, Hindon, and Sturminster. Whether anything came of these complaints is unknown, but nothing further is heard of a market at Tisbury. The earliest licence recorded is from 1408, when a Wednesday market and six-day fairs in May and August were granted to Henry, Prince of Wales Mere having become a fixed component of the Duchy of Cornwall be held in the town; it is not known if the market was simply a re-licensing of the original. The period of Henry's lordship saw the parish church enlarged, although the castle had by now fallen into disrepair.
The town was a fairly compact settlement strung out along the east-west through-road, with the marketplace close to a central position within the town, where lesser roads from north and south entered. The marketplace is still known as The Square (though encroachment has disguised any originally rectangular shape), but markets are no longer held there. The church faced onto the through-road, but a little further west than the marketplace. The first reference to Mere as a borough is in 1304, in the context of representation at parliament, but the town is little documented and we have no mentions of burgages or burgesses. Most of the laid-out plots of the town ran off either side of the through-road, although original plot boundaries have become indistinct over time. There was little subsequent expansion beyond this area until the nineteenth century.
Mere was never more than a small market town, but a moderately successful one. The castle, with its deer park and stud farm, would have provided some business for the townspeople if only for a century or so, this was a crucial period when the town was establishing itself within the competitive environment. Its economy remained oriented towards crop cultivation, raising livestock, production of foodstuffs stemming from the same, and most important a thriving market for wool. The presence of a fulling mill in the early fourteenth century points to cloth-making in the town, and that industry became more developed over the course of the century.