Strategically situated at the end of the River Fal, overlooking the entrance to the Carrick Roads estuary, Falmouth's port has been a maritime hub for more than 500 years. Originally known as Smithwick, the town began as a small collection of buildings belonging to the powerful Arwenack family, who were influential members of the Tudor court and the first captains of Pendennis Castle. Their manor house – believed to be the oldest house in Falmouth – can still be seen on Grove Place.

During the 16th century, the town was a strategic piece of Henry VIII's national system of coastal defence, and a vital place for shipbuilding and repairs. Key to its importance was the astonishingly deep harbour, meaning it can berth vessels of pretty much any size. The town's fortunes flourished after the river at Truro silted up, and it became the county's key trading port – especially during the era of the Packet Service, which carried mail, bullion and supplies between Britain and its overseas colonies between 1689 and 1850. More recently, the town played a key part during the D-Day invasion in 1944; many of the battleships and troop carriers destined for France were moored up along the Fal in the days before the invasion.

Today, Falmouth's dockyard remains the largest shipbuilding centre west of Plymouth, and Pendennis Shipyard is renowned for its high-class superyachts.