Ellesmere stretches down a hillside, below a castle and above the lake after which named. A Saxon rural settlement was probably focused around a church – Domesday mentions no such but indicates the presence of two priests, suggesting a collegiate church, as was quite common with Saxon churches. Earl Roger de Montgomery was lord of the manor at the time of Domesday and it was probably he, or perhaps his son, who built the castle; but castle and manor were forfeited to the king after the son's rebellion. So close was Ellesmere to the Welsh border that Henry II granted it to the Welsh prince Dafydd ap Owain, who had married Henry's half-sister, and in 1205 King John granted it to Dafydd's nephew and his own son-in-law, Llewellyn, Prince of Wales, who forfeited it for rebellion then had it restored (1220) during Henry III's minority. That same year Llewellyn obtained a licence for a Tuesday market at his manor at Bidford (Warks.), another part of his marriage gift from John, and then in 1221 licence for a Tuesday market at Ellesmere. But he remained troublesome and Ellesmere had reverted to Henry III by 1230.
Having leased the manor in 1253 to John de Grey, who then attempted to withhold royal revenues due from it, Henry ordered him in 1256 to surrender the manor, which was turned over to Prince Edward instead. Major repairs to Ellesmere Castle and the royal residence there followed, and in 1258 Henry issued a new market licence for a Thursday event, with orders to the sheriff to ensure the market was held. At almost the same time Peter de Montfort was empowered to collect murage tolls for five years to finance the walling of the town of Elllesmere; this was probably through the insistence of the 'mad parliament' that summer, which appointed a reform committee that changed the custodians of royal castles, giving de Montfort custody of that at Bridgnorth and later (1259) of Ellesmere's castle and manor. If a defensive enclosure was put up, however, it has left no trace.
Ellesmere thus became embroiled in the politics of the civil war. At one point therein, King Henry assigned custody of Ellesmere to Hamo le Strange, sheriff of Shropshire, though whether he was able to maintain control of it is unclear; however, he at least remained loyal and was rewarded after Evesham with a grant of the manor, along with that of Strettondale. Hamo's father, John, lord of Knockin (Salop.) and himself a former sheriff of that county (1236-45), had obtained licence for a market and fair at Knockin in 1249, though the following year John Fitz-Alan challenged them as damaging to his commercial institutions at Oswestry, though the outcome is unknown. Hamo accompanyied Prince Edward on Crusade and, he dying (1272) during the course of the expedition, Edward III made a life grant of Ellesmere to Hamo's brother Roger, upon whose death (1280) an extent was taken of the manor, which estimated that annually the burgage rents amounted to #163;3.2s.6½d., the assize of ale produced about 20s. in fines, and the profits from the borough court generated 30s.
The early part of Henry's reign had seen Llewellyn's wife Joan, Henry's half-sister, issue a charter granting the borough of Ellesmere the customs of Breteuil. In 1338 Roger (or Robert) le Strange – who was a direct descendant of Hamo, though of the Knockin branch of the family – a year after his uncle's widow surrendered her life interest in Ellesmere to him, established a new town there and incorporated the old borough within it. In 1280 59 burgages had been recorded there, which suggests that Ellesmere was only a small town, or burghal component within a larger settlement; bseides, the evidence for installation of a planned town there is patchy – it seems just as possible that a more gradual development responded to the topography of the site.
The location of the suspected pre-Conquest church, and any associated settlement, is unknown but possibly on the same site as the present parish church of St. Mary's, in the north-eastern part of the town, on the south side of a possible through-road approaching from the east before looping around the town. Just to the east of the churchyard was the castle, slightly more upslope. On either side of the churchyard lanes ran south from the through-road to another east-west street, part of which is the present High Street, descending from the castle to the likeliest candidate for the marketplace, a wide junction of that street with Cross Street. On the other side of this postulated marketplace the High Street continues as Market Street. The sloping terrain influenced the size and shape of plots; those between the churchyard and Cross Street are small and irregular. Plots closer to a burgage type are discernible on the north side of the through-road, on the west side of Cross Street and the marketplace, and in areas somewhat west and south-west of the marketplace. These are suggestive of planned elements, but not necessarily laid out all at the same period.
Despite the impact of recurrent bouts of plague in the second half of the century, which are known to have decreased property values at Ellesmere, its Thursday market is still evidenced in the 1380s, in inquisitions post mortem on members of the Lestrange family of Knockin, along with fairs in September and November. But its proximity to Oswestry's market may have eventually taken a toll. By Leland's time Ellesmere seems to have been experiencing an economic decline, which may have been underway by the fifteenth century. He referred to two fairs still being held there, yet he could see no evidence of a weekly market. The medieval town does not show signs of having expanded further fduring that period.
