During the eighth century Wilton was the focus for Saxon power in its region, the chief place of what would become a shire of the kingdom of Wessex: royal residence (remembered in the name Kingsbury Square) and administrative centre. The invading Saxons must have found it easy to decide to establish themselves at the site of Wilton, for which there is no evidence of settlement at earlier periods. It sat on a slightly raised area, almost an island, within the courses of the converging Wylye and Nadder rivers; these, together with associated marshes, created a natural barrier that made the place relatively easy to defend, yet it was adjacent to fertile agricultural land. Not far away, Old Sarum had in the Romano-British period probably been a focus for administration of population and the lands worked by that population; the Saxons were able to take over this system by planting their own administrative base at Wilton. A minster church appears to have been erected adjacent to the Saxon palace in the ninth century; the Christianization of the Saxons naturally targeted their influential leaders first.

Although the foundation story of Wilton abbey, identifying it as initially a chantry, then a nunnery headed by the sister of King Egbert, was written in the fifteenth century and must be suspect, Jeremy Haslam [Anglo-Saxon Towns in Southern England, Chichester: Phillimore, 1984, p.123] feels it encapsulated an authentic tradition, since a monastery dedicated to St. Mary is known from tenth century sources and the proximity to Kingsbury of the present St. Mary's church (where several members of Edward the Elder's family are buried) has the appearance of a common pairing of minster church and secular palace in royal towns of the Saxons. Alfred refounded the monastery on a larger but nearby site; by the time of Domesday it had become the wealthiest nunnery in England. Early in the tenth century a new bishopric had been created for Wiltshire; Wilton was for a time – perhaps during the relatively peaceful reign of King Edgar (959-75) – the seat of the bishop, although this moved around to other places such as Ramsbury, Old Sarum, and eventually New Salisbury.

In the context of the Wessex monarchy's resistance to repeated Danish incursions, the focus shifted back and forth between Wilton and Old Sarum; the latter, as a fortress, was more suitable for preserving population, resistance, and government in emergencies, but Wilton, more accessible and better supplied with water, was a better administrative and commercial base in more peaceful periods, housing the royal archives and, from about the reign of Edgar, a mint – something that likely evidences its status as a defended town. These characteristics, along with its position within the system of roads and rivers, can leave us in little doubt that Saxon Wilton must have been an important trading centre, both for the regional population and for the royal and monastic households within the town. Furthermore, Wilton was of symbolic significance, as a focus of the Wessex monarchy, and of strategic import, being positioned to protect key routes to settlements along the river valleys and into other parts of Wessex. The Danes appreciated this too and in 871 a battle was fought at Wilton; it cannot be surprising then that Wilton was chosen by Alfred or his successor as one of the sites for erecting, or strengthening, defensive fortifications, as burhs. Archaeology has confirmed the existence of such defences at Wilton, though not their date; nor is the line of the walls known with certainty, but it is suspected to have made use of the rivers as an outer barrier. Despite this effort, a new round of hostilities saw the town sacked in 1003.

Recovery from that traumatic event is evidenced by Domesday Book, which shows Wilton as still the leading town in Wiltshire in the latter half of the eleventh century, and in the keeping of a royal official. Although not given a detailed entry, Wilton was one of only two places then explicitly acknowledged as boroughs, along with Malmesbury; it may not be coincidence that the earliest mints in Wiltshire were established in those two towns. Though Wilton's moneyers relocated to Old Sarum during a crisis period, at least one later returned to Wilton and a mint continued to operate there until mid-thirteenth century. A number of its burgesses were actually tenants of rural manors, suggestive of the value to the region of Wilton as a trade centre. A charter of King Edgar refers to a Wilton property, once held by a merchant, adjacent to the site of the 'city'. Yet the Norman aversion to Saxon power bases led to investment in urban infrastructure being directed instead towards Old Sarum.

Notwithstanding the favouritism shown Old Sarum, at an uncertain date, but probably in the 1120s, Henry I granted that the burgesses of Wilton – those belonging to the merchant gild and the others who contributed to the customary payments due the king – might have the same exemptions from tolls and other exactions on trade that were held by the burgesses of London and Winchester (these two leading cities of the realm being common models on which liberties were transmitted to southern boroughs at this period). It may well have been gild representatives who negotiated for the grant; both the grant and the existence of a gild are testimony to the extent of commercial activity in which Wilton residents were engaged. As was not uncommon in English towns, once a mayoral/conciliar administration was instituted (by mid-thirteenth century) it and the gild became so conjoined in local administration as to sometimes seem indistinguishable, though the gild was most visible as the financial arm of government; its members, as those burgesses possessing toll exemption, were likely prime movers in the drawn-out trade battle with New Salisbury, each side vying to dominate the region's commerce.

The current working hypothesis – formulated by Haslam [op.cit., pp.125-27] and adopted by the Extensive Urban Survey – is that the historic core of Wilton, at a central point on the land contained within the almost-encircling rivers, focused on a Saxon palace and on a minster church slightly to the north, with a marketplace between them (a common adjacency in royal towns), all surrounded by settlement particularly intense around crossroads, on the north and west sides; as yet there is little archaeological evidence to either support or contradict this interpretation. The subsequent burh defences are thought to have surrounded this core plus a much larger area to the west, north, and north-east – some of it expansion beyond the original nucleus, but also allowance for space for regional refugees and their livestock – but not south-east of the settlement, an area occupied by the re-founded abbey. At least some of the medieval suburbs are known to have originated in the Late Saxon period, indicating population growth at prospering Wilton, so well-placed for both local and long-distance commerce and with an important abbey drawing visitors. Note that the 'burh' referred to in Kingsbury was not the town defences but the royal residence protected by an enclosure; the minster church would likely have had an enclosure too.

During the two centuries following the Conquest, Wilton's population expanded through much of the area defined by the burh walls and in the existing suburbs; the site of the disused royal palace seems to have been, at some point, converted to general residential use. It was probably during this period of prosperity that stone walls were added atop the burh embankment. The area posited as the Saxon marketplace continued to serve that function into the early twenty-first century, although today it has shrunk in size. Facing onto it was the medieval guildhall, said to have been on the same site as the modern town hall; its style – space for stalls on the ground floor, for other vendors beneath a pentice and a meeting-room on the upper floor – suggests a fourteenth-century structure; this was a building of the merchant gild, not of the borough lord and market-owner, whose reeve seems not to have had a tolseld, but collected tolls at the market cross in the centre of the marketplace. At the north-west corner of the market was a crossroads where met South, West, and East (now North) Streets, all three passing through suburbs; the fourth branch, the short Silver Street (perhaps where members of the small local Jewish community may have resided?), terminates at Kingsbury Square, and we should probably think in terms not so much of a crossroads as of a junction of a north-south through-road with a road from the west. South Street, which leads to a crossing of the Nadder, is thought to be on the line of a Saxon route known as the Port Herepath, meaning town highway. Just beyond the marketplace, Minster Street connected Kingsbury with the abbey.

No record of a market licence grant to Wilton is extant; this would not be surprising, given the likely antiquity of a market there, were it not for the fact that Edward I was led, by the burgesses, to believe that one of his predecessors had granted Wilton by charter the right to hold markets on Mondays, Wednesdays, and Fridays, along with a prohibition against any other markets being held on those days within three miles of Wilton. As market licences were rarely issued for more than a single day, we must question the authenticity of any such charter and see it possibly as a device of the Wilton authorities in their competitive struggle with Salisbury, which happened to be just three miles distant; the aim was perhaps to confine Salisbury markets to their licensed day (Tuesday). Although in 1288/89 the Earl of Cornwall, whose father had obtained grant of the borough from his brother, Henry III, claimed only a Wednesday market, upon his death in 1300 the inquisition post mortem jury of burgesses asserted the three market days; the jurors estimated the market's annual value at a very modest 12s., which included not only the tolls but income from rentals of stalls and butchers' shambles; this figure is about 40% that of others for market revenues known from several years of the late thirteenth century.

That the Crown accepted the Wilton claim is suggested in 1305, three years after Edward I had granted the borough to his daughter Mary, when he ordered the sheriff to make a public proclamation forbidding anyone to sell merchandize in Salisbury on Wilton market days, and again by Edward III's insistence in 1361 that markets at Salisbury could only take place on Tuesdays and Saturdays. The three-mile boundary came up again in Edward I's reign in a jurisdictional dispute between the borough lord and the Abbess of Wilton; the latter claimed the assize of bread and ale in Wilton and for three miles around, but the sheriff ruled that this had always belonged to the king. The authority of the king might win out against an abbess, but it could not halt the march of progress in a commercializing society, in which public buying and selling could no longer be confined to set times and places.

The inquisition post mortem on the Earl of Cornwall also reported him as co-owner, with the abbess, of the tolls from a twelve-hour fair in September, though his share amounted to a mere 6d, comparable figures being documented in other sources from slightly earlier dates. This fair had been granted the abbey by Henry I; in 1130 it was said to have produced 25s.7d in tolls for the abbey, but at that period had an eight-day duration, so its reduced length and value in 1300 is probably another reflection of Salisbury's dominance of regional commerce. In 1414 the mayor, burgesses, and community of Wilton obtained a grant of their own fair, in July, but only for a single day, and it was soon complained that the fair was too short to attract participants, so the fair was extended to four days. Henry VI permitted the town (1433) to hold sheep fairs in May and September, and Henry VII would authorize further fairs – the VCH Wiltshire [vol.6, p.18] suggests these multiple grants indicate difficulty in establishing a successful fair at Wilton.

Wilton was once more a war casualty in 1142, when Matilda's supporters forced out those of Stephen, attempting to bolster the defences, and then sacked the town. Though it recovered from this setback, the town faced a more serious and persistent threat in the thirteenth century, in the form of aggressive competition from its new near-neighbour, New Salisbury, which managed to divert to itself much of the trade that would earlier have gone to Wilton. Construction of a bridge over the Avon at New Salisbury in 1244 removed Wilton's previous advantage in having the most viable river crossing in the region. The closure of Wilton's mint in 1250 did not help matters and perhaps is itself a reflection of the rapid siphoning away of prosperity and residents to Salisbury. A number of mercantile, artisanal, and service occupations are known to have been present in Wilton from the eleventh to thirteenth centuries, and we see the kind of range that might be expected in a large town (though without the number of specializations found in the larger cities). The picture does not seem quite so flourishing in the fourteenth century, and the town's economic importance in the region was in decline even before plague took its toll; despite the fact that King John had required, for his renewal of the toll exemptions, Wilton to pay both cash and a large quantity of linen, Wilton's cloth industry seems to have been on a smaller scale than that of Salisbury.

Already fighting a losing battle against Salisbury, Wilton may by mid-fourteenth century have lacked the robustness in economy and population to recover from the adverse effects of the Black Death. By 1442 Wilton's significance was sufficiently reduced that at least one of its remaining merchants found it necessary to obtain from his mayor a letter of reference, specifying the toll exemptions Wilton's gildsmen had been granted, and the Bristol authorities thought it advisable to keep a record of this in one of their official registers. By the mid-fifteenth century, depopulation was evident as Wilton shrank within itself (back to about the area of its early Saxon core, with the suburbs almost disappearing), a number of stalls and shambles in the marketplace could not find tenants, half of the flour mills closed down, the fabric of town bridges and churches was not being maintained – of at least eight churches known to have existed within medieval Wilton (three of them surrounding the marketplace), plus one in each of four suburbs, only two still stand – and many houses had become derelict. The dissolution and demolition of the abbey in the 1550s was just another nail in the coffin. Not until a resurgence of the cloth industry in the seventeenth century would new life be breathed, for a time, into the original leading town of Wiltshire.