Ramsbury sits on the northern bank of the River Kennet (though not at the water's edge), not far from the line of Roman Ermin Street, Its valley, like that of others of the area, was long peppered with settlements, and Ramsbury perhaps the largest of them by the eleventh century, though there is little trace of pre-Saxon settlement at the site of the town itself. Its importance as early as the ninth century is seen from two things. First in the presence there, early in the century, of a large-scale iron-smelting industry, with four furnaces and several forges, which entailed the organization of long-distance transport of iron ore, accommodation and management of a workforce, and distribution of the blooms and other products to more than local customers; this foundry, located beside the future High Street, may have operated under royal patronage. Second, in its choice as the seat of a bishopric from 909 until 1078, when (after uniting with Sherborne in 1058) that was transferred to Old Sarum, after which Ramsbury Hundred – one of the largest non-royal estates in the county – shrank slightly in size until it comprised only the large and populous parish of that name. This choice, along with some architectural remains, point to the prior presence there of a large, perhaps minster, church, which served as a cathedral before reverting to parish church.

Ramsbury must be considered primarily an ecclesiastical centre in the Late Saxon period (and as such proto-urban), its commercial services needs perhaps met at first by Bedwyn and later Marlborough. Any settlement around a cathedral and the original episcopal residence (posited as adjacent) need not have been more than a village, many of its residents dependent on the cathedral for their livelihoods, and their houses perhaps contained largely within an ellipse formed by two curving streets, north and south of the church/palace – these were later the High Street and Back Lane, the latter of which might have been the original main thoroughfare of the village (for industrial operations such as the smelting site were not normally sited within densely settled areas). Domesday records the Bishop of Salisbury as the holder of the manor in 1086 and notes five burgesses associated with it, but these were of Cricklade. In subsequent centuries the bishops were often in residence at their Ramsbury palace, relocated in the twelfth century to a more spacious site on the west side of Ramsbury; to discourage intruders it was crenellated, and its precinct walled and crenellated, in the fourteenth century. A Castle, or Castle Wall, Street heard of in the Middle Ages and of uncertain location, might have been inspired by the later palace, or it may have been the present Burdett Street, connecting High Street and Back Lane, in which case it could be a reference to the original palace as a base of authority.

The village acquired a second lease of life with a possibly planned extension along the present High Street, running east-west, which has a notably straight central section – perhaps suggesting a straightening of an only lightly populated and secondary village street; burgage-style plots extended south of it to the river's edge. It is not impossible, however, that growth might have been more organic, along a village street beginning at the churchyard and then paralleling the course of the river in either direction.

Ramsbury burgages are explicitly referenced in the fifteenth century, but the grant of a market to the Bishop of Salisbury in 1219, during Henry III's minority, suggests urban development at that time. The initial success but subsequent problems this market experienced later in the reign have been discussed elsewhere; although the market was formally renounced, public trading of foodstuffs was allowed to continue informally. In practice this occurred mainly on Sundays and religious festivals, when people naturally gathered at church for observances – a situation that may well reflect ancient manifestations of market-type activity; another instance is documented at Crossthwaite (Cumb.), whose informal market in 1306 was prohibited following a complaint from the farmers of tolls at the borough of Cockermouth that it was cutting into their income, although in 1292 the Countess of Aumale (who was also Cockermouth's lord) had argued, presumably in response to an earlier complaint, that there was no market and no tolls or stallage were collected, but that the locals, gathering at the church on feast-days, sold meat, fish and other goods. A legal challenge to the state of affairs at Ramsbury was defeated when a jury confirmed that the bishop had no formal market there – the definitive factors being that he collected no tolls on any trading taking place there and did not advertise this trading as a market. A formal market was revived at Ramsbury through a new licence in 1300, and this market is still seen in operation in 1319. The two fairs authorized at Ramsbury, as part of the 1240 compromise with Marlborough, were not challenged, but in the context of the quo warranto proceeding in 1281 the bishop's attorney took pains to point out that these were not damaging any other fair in the vicinity.

The marketplace may have been along the High Street, or possibly located in an open area (later known as The Square) at its east end, into which converge also Back Lane and a road coming from the river crossing to the south-east, and from which departs what is essentially a continuation of the High Street, though deviating to the north-east, already known as Oxford Street in the Middle Ages. Settlement at Ramsbury spread along Oxford Street in the Late Middle Ages, but westward expansion was prevented by the enclosure around the episcopal manor-house and its park..

Absence of references to Ramsbury's market after 1319 have prompted the conclusion that it may have faded away, in the face of competition from Marlborough. More likely it was simply too insignificant to attract attention. Its main business must have been in grain from the rich agricultural lands of the area, and in the secondary products from that (bread and ale); certainly the parish was well-endowed with corn mills. The conversion of a mill in the manorial demesne, near the palace, to fulling purposes by 1395 could be seen either as an attempt, in the face of a weakening market, to stimulate growth of a local cloth-making industry, or as support for a well-established if modest industry; the mill continued its fulling function into the latter half of the fifteenth century, but in the next was changed back to a corn mill. Similarly, leather-based industries are not evidenced until the seventeenth century; yet it seems probable that, with plentiful supplies of hide animals and good water access, they would also have existed in the Late Middle Ages. It is more likely that it was the sixteenth century that saw stagnation in Ramsbury's economy, as it did in many other of the smaller Wiltshire towns.