Situated within a loop of the River Avon, so that water surrounded it on three sides, Chippenham's natural defences would have made it attractive to early Saxon settlers, who had arrived by the ninth century. A road from London to Bristol ran through Chippenham and became increasingly important over the centuries, as the cloth trade developed. The hundredal inquests of 1274/75 show that wool was transported from Bristol to Southampton by that route; the local jury presenting to the commissioners of enquiry also stated that Chippenham had been a royal borough since the time of Henry II. It was counted as a borough for purposes of eyre presentations in 1255, parliamentary representation from 1295, and taxation from 1306 (although such classifications could be somewhat tentative), as well as being so described in the inquisition post mortem on Joan Gascelyn in 1287. We have no surviving mention of burgages until 1604, when 129 were listed, but these doubtless were by then of some antiquity.

Even in the Anglo-Saxon period we can imagine Chippenham as proto-urban without too much difficulty. By mid-ninth century the settlement was significant enough to host royal marriages and a royal hunting lodge. Its defensive advantages, combined with the possibility that King Alfred – who had used Chippenham as a base for his campaigning in 877 – might have been in residence, was probably what made Chippenham a target for the Danes, who in 878 advanced on it from Mercia and themselves used it as a base from which to expand into Wessex. That, to drive them out, Alfred had to lay siege to Chippenham suggests it must have been fortified, either by the Danes or as a Wessex burh, but this has not yet been proven by archaeology. As a royal estate and residence, referred to in the early tenth century as a villa regia,(indicative of an administrative centre), Chippenham would have seen some degree of trading activity, and it has been suggested that the prefix of the name might derive from the Old English 'ceap' or its verb 'cipan' referring to trading activity or a location where it took place; the term could even be employed as an occupational designator, as in the case of Walter le Chepere, mentioned in the Patent Rolls – one of a group drawn from Warminster, Lacock, Bedwyn, Heytesbury and elsewhere in Wiltshire – in 1338. While this is not the only possible interpretation (nor even the most likely) of Chippenham, it is a differentiator quite commonly found elsewhere, such as the market towns of Chipping Campden and Chipping Sodbury in Gloucestershire, Welsh Chepstow near the border of the same county, Hertfordshire's Chipping Barnet (which later lost its qualifier), and Chipping Ongar in Essex (even though these represent a later medieval usage). Yet Chippenham in Cambridgeshire, close to Newmarket and Cambridge, does not evidence having had an early market nor significant commercial activity; it appears a predominantly agricultural settlement, with a licensed market implemented only in 1226, in support of a Hospitaller preceptory and its resident invalids, courtesy of a king who often overnighted there during his itineraries. The market was never of particular note, and in its case we may surmise the place-name derives from a Saxon personal name.

If early medieval coins marked with the name 'Cepen' refer to the Wiltshire Chippenham, then a mint was there in the reign of Ethelred II, which would mean that the authorities considered it a town. Domesday, which also renders the name as 'Cepen', does not present it as a borough but part of a larger royal manorial estate; nor, within a relatively large population, do we hear of burgesses. At some point, or points, in the twelfth century this estate was broken up and parcelled out in grants, likely to Chippenham's detriment in the short term.

So it was to Roger de Toroldvill that King John issued in 1205 licence for a Wednesday market, together with the right to a fair in October. A series of later grants to the Gascelyn family gave them (1267) a June fair, added a May fair (1310), and also added (1314) a Saturday market, then (1320) confirmed all these grants and added a November fair – celebrated at the festival of St. Andrew, to whom the parish church (a late medieval structure but embodying architectural details from the twelfth century) was dedicated. However, these various markets and fairs may not all have been for the town itself, but for Sheldon, another manor within the old Chippenham Hundred. In January 1376 the king cancelled a pontage grant made the previous year to the townsmen of Chippenham, following a complaint by Elizabeth Gascelyn, who had become lady of Chippenham only a few months prior to the grant, that one or more of her markets and fairs had had been severely damaged by the imposition of the tolls levied to fund bridge repairs; the notion that such tolls, additional to those customarily charged, would have kept away traders may be supported by the inquisition post mortem on her late husband, which in its valuation of the manor makes no mention of any revenues from market or fair, although these may be lumped in with the overall value of the manor. The value of the Gascelyn market had been estimated at 100s. in 1287, although another inquisition post mortem on the town's late lord, in 1307, valued market and fair at only 60s., so pontage may not have been the only cause of a drop-off in business in the 1370s.

The marketplace, with adjacent parish church (probably that noted in Domesday and mentioned as early as 1042) on its west side, was the focal point of the medieval town; it may have been so since the time of Alfred, if Chippenham were a burh, although that remains conjectural. There is nothing to suggest the kind of deliberate shift in focus that could take place when Norman lords took over Anglo-Saxon power bases, and no castle was raised there. The large marketplace was crossed by a central street, known by 1554 as High Street, which continued to a crossing of the Avon. Burgage plots are perceptible around the market and along the High Street, with subsequent spread of settlement – whether planned or organic is debated – within the river loop, across to a northern suburb, and around 1406 into New Street as the town flourished, of which prospering the progressive grants of markets and fairs may offer a reflection.

Assigning even a very rough date to when Chippenham could be considered to have become urban is a difficult call; the lack of archaeological investigation and scarcity of revealing documentary evidence leads us to fall back on topography, hypothesis, and comparison with other Wessex towns. The impression given, however, is of a settlement building an urban character over the course of the Late Saxon period, suffering a setback in the eleventh century, in the face of neglect from the new Norman kings, William to Stephen, then slowly getting back on track in the twelfth as it was able to benefit from the growth of commerce across the country – particularly the wool trade, and later that in cloth – making it of interest to lesser lords eager to invest in the development of market towns.