Historically, the town's economic foundation was the cloth trade. This is reflected in the person of the fourteenth century cloth magnate Jack O'Newbury and the later tale of the Newbury Coat. The latter was the outcome of a bet as to whether a gentleman's suit could be produced by the end of a day from wool taken from the sheep's back earlier the same day.
Newbury was the site of two English Civil War battles in 1643 and 1644. The nearby castle at Donnington was reduced in the aftermath of the second battle.
In 1795, local magistrates, meeting nearby, introduced the Speenhamland System which tied parish welfare payments to the cost of bread.
The town's location at the intersection of the routes from London to Bristol and from Southampton to Birmingham made it, for many years, a transport bottleneck. Since the start of the 1970s, the A34 and M4 trunk routes have intersected 5km north of the town, which junction is now being upgraded. The ring road around the town still suffered serious congestion and a bypass was proposed in the late 1980s and built in the early 1990s. This decision was highly controversial nationally and a major environmentalist campaign was conducted to oppose the development. The confrontation between demonstrators (many veterans of the protest against M27 extension at Twyford Down) and contractors was dubbed the Third Battle of Newbury.
Today, Newbury is home to the mobile phone company Vodafone. It is the administrative capital for the West Berkshire district.