The second, more recent one, relates to Rawtenstall's identification as a cattle farm in 1324 and combines the Old English ruh 'rough' and tun-stall 'the site of a farm or cow-pasture',[2] or possibly, 'buildings occupied when cattle were pastured on high ground' The earliest settlement at Rawtenstall was probably in the early Middle Ages, during the time when it formed part of the Rossendale Valley in the Honour of Clitheroe, and consisted of simple dwellings for forest servants and animals.

The town entered a major period of growth during the Industrial Revolution, as new mills were constructed to process cotton.

Other industries active in this period included quarrying and small scale coal mining, as well as an expanding commercial sector.

The firm of H. W. Tricketts, in nearby Waterfoot, had been a major producer and exporter of footwear across the British Empire, but shoemaking declined rapidly from the 1980s.

[4] A local board was formed for the town in 1874 and the district it governed was extended to cover parts of the townships of Lower Booths (Rawtenstall itself), Higher Booths, Newchurch and Haslingden in the ancient parish of Whalley and Cowpe, Lench, Newhall Hey and Hall Carr, and part of Tottington (Higher End) in the ancient parish of Bury.

The area is bounded to the north by Loveclough and Whitewell Bottom, to the east by Waterfoot and Cowpe and to the south by Townsend Fold and Horncliffe.

The River Irwell passes through the town on the first part of its route between Bacup and Manchester, collecting Limy Water close to the junction of Bury Road with Bocholt Way.

Over recent years the area has become increasingly popular with visitors, attracted by historic buildings, dramatic landscapes and the heritage railway, the East Lancashire Railway which offers tourists and visitors a chance for days out at Rawtenstall, Ramsbottom and Bury stations among many rural communities along the line.

[12] By 2000, Rawtenstall's 1960s shopping centre had become deserted and boarded-up, and after 2003 various proposals were put forward regarding reconstruction or refurbishment.

[14] In late 2011 the shopping centre was demolished, creating a new town square area, where local markets and other events are infrequently held.

Rossendale Council funded the demolition using money set aside for a public pool in neighbouring town Haslingden.

[19] The town is also home to the traditional herbalist and temperance bar Fitzpatrick's Herbal Health, which claims to be the oldest brewer of sarsaparilla and dandelion and burdock in the country.

The last, by sculptor Bernard Tindall, celebrates Rossendale's twinning links with the town of Bocholt, Germany.

It consists of the former house of the mill owner George Hardman, built in the 1840s, and originally standing in 28 acres of parkland.

The recently refurbished museum contains exhibits of local history, gallery spaces, and a cabinet of curiosities room.

Arthur Mee considered it 'one of the best small museums in the North', saying "...perhaps the most fascinating things in the museum are the Domestic Bygones, with hourglasses, toys and spinning wheels, snuff boxes and tinder boxes, the sand dredgers used before blotting-paper was known, rushlights and moulds for making candles, a grand collection of the homely things our forefathers (sic) used".

This has doubled its size and enabled the museum to develop its displays and education work, its cafe/restaurant and bar, as well as the study spaces and a shop.

It reopened at the end of July 2021, and now includes the old Rossendale Council Parks Department yard at the rear which has been converted to a multi-purpose public area.

[32] It re-opened after a period of closure in November 2011 with new funding, with a large ceremonial fireworks display on its opening day, Bonfire Night.