The Sultanate of Sulu awarded a German consular service ex-member a piece of land in the Sandakan Bay to seek protection from Germany.

In 1878, the Sultanate sold north-eastern Borneo to an Austro-Hungarian consul who later left the territory to a British colonial merchant.

Unable to fund the costs of the reconstruction, the administrative powers of North Borneo were handed over to the Crown Colony government.

[11] The name Elopura, however, is still used for some local government functions of the Sabah State Legislative Assembly, including elections.

[18] In 1855, when Spanish power began to expand in the Philippine archipelago, they began to restrict the trade of foreign nations with Sulu by establishing a port in Zamboanga and issuing a ruling which declared that ships wanting to engage in trade with the Sulu Archipelago must first visit the Spanish port.

[19] Schuck associated himself with the Singapore-German trading firm of Schomburg and began working in the interest of the Sultan and Datu Majenji, who was an overlord in the island of Tawi-Tawi.

Large quantities of arms, opium, textiles and tobacco from Singapore were shipped to Tawi-Tawi in exchange for slaves from the Sultanate.

[19] The intervention of Germans on the Sulu issue caught the British' attention and made them suspicious, especially when the Sultanate had asked for protection from them.

[20] Schuck then established warehouses and residences in the Sandakan Bay, along with the arrival of two steamers under the German flag and it served as a base for the running of gunpowder and firearms.

Judging from the stores in the settlement, cotton goods, arms and especially firearms, appears to be the articles of trade with the natives of Sulu.

[19]In 1875, an Austro-Hungarian consul named Baron von Overbeck purchased the rights to a defunct American trading company in Borneo.

[21] After efforts by Overbeck to sell northern Borneo to the German Empire, Austria-Hungary and the Kingdom of Italy were unsuccessful,[22] he went into business with Alfred Dent in 1877.

The situation in the nascent colony remained tense, with the Borneans being hostile towards the authority of the British North Borneo Company, and all-out warfare prevented only by the presence of Royal Navy ships offshore.

[4][27] During their occupation, the Japanese restored the town's previous name, Elopura and established a prisoner of war camp to hold their captive enemies.

[28] Thousands of British and Australian soldiers lost their lives during this forced march in addition to Javanese labourers from the Dutch East Indies.

[6][32][33] At the end of the war, the British North Borneo Company returned to administer the town but were unable to finance the costs of reconstruction.

The new colonial government chose to move the capital of North Borneo to Jesselton instead of rebuilding it as the cost of reconstruction was higher due to the damage.

[38] Sandakan is one of the six districts that is involved in the Eastern Sabah Security Command (ESSCOM), a dusk to dawn sea curfew which had been enforced since 19 July 2014 by the Malaysian government to repel attacks from militant groups in the Southern Philippines.

[13][51] The Chinese population here are equal proportions of mostly Cantonese (descendants of seafaring traders who settled in the East Coast of North Borneo then) and also Hakka (mostly descended from voluntary migrants and Taiping Rebellion refugees), who arrived during the British period and had their original settlements before in the town which is now known as the Chinese Farm River Village.

The port is important for palm oil, tobacco, cocoa, coffee, manila hemp and sago exports.

[60] Sandakan also enjoyed modern developments such as telegraph service to London and paved streets before Hong Kong and Singapore.

[63] The town itself is one of Sabah's major port, other than in Kota Kinabalu, Sepanggar Bay, Tawau, Lahad Datu, Kudat, Semporna and Kunak.

[66] But in recent years, many businessmen have shifted their operations away from the town centre to other suburbs due to a large presence of illegal immigrants from Mindanao islands in the Philippines which has caused trouble, mostly crime such as theft and vandalism on public facility and also solid waste pollution in marine and coastal areas.

The only highway route from Tawau connects: Sandakan – Telupid – Ranau – Kundasang – Tamparuli – Tuaran – Kota Kinabalu, as well Lahad Datu – Kunak – Semporna – Tawau (part of the Pan Borneo Highway)[74] Regular bus services with minivans and taxis also can be found.

[75] Sandakan Airport (SA) (ICAO Code: WBKS) provides flights linking the town to other domestic destinations.

[80] There is a ferry terminal which connects the town with some parts in the Southern Philippines such as Zamboanga City, the Sulu Archipelago and Tawi-Tawi.

Manila, Suan Lamba, Sibuga and Kim Fong BT4 areas,[92] and the Sandakan Prison is located in the town centre.

The oldest religious buildings are the St. Mary's Cathedral, Parish of St. Michael's and All Angels, the Sam Sing Kung Temple and the Jamek Mosque, which was opened by a Muslim cloth merchant from India, known as Damsah, in 1890.

The Sepilok Orang Utan Sanctuary is a place where orphaned or injured orangutans are brought to be rehabilitated to return to forest life.

[118] In 2008, the Borneo Eagles-Sabahans (a team which included a few professional Fijians) at the newly built Sandakan Rugby Club hosted a 10-a-side tournament for the eighth and last time.