Tenby flourished in the 15th century as a centre for the textile trade, exporting cloth in exchange for salt and wine. Cloth making declined in the 18th century, but the town soon reinvented itself as a fashionable watering place. The arrival of the railway in the 19th century sealed its future as a resort, and William Paxton (owner of the Middleton estate in Carmarthenshire, now home to the National Botanic Garden of Wales) developed a saltwater spa here. Anxiety over a possible French invasion of the Milford Haven waterway led to the construction in 1869 of a fort on St Catherine's Island.

Among those who have taken inspiration or rest here are Horatio Nelson, Jane Austen, George Eliot, JMW Turner, Beatrix Potter and Roald Dahl. The artist Augustus John was born here, and he and his sister Gwen lived here during their early life.