The North Borneo Chartered Company (BNBC) accelerated growth of the settlement's population by encouraging the immigration of Chinese.

Consequent to the Japanese occupation of North Borneo, the Allied forces bombed the town in mid-1944, razing it to the ground.

During that period, it was garrisoned by the British Special Boat Section, and guarded by Australian Destroyers and combat aircraft.

[8][note 4] In the early 1890s, approximately 200 people lived in the Tawao settlement, mostly immigrants from Bulungan in Kalimantan, and some from Tawi-Tawi who had fled from Dutch and Spanish rule.

In 1898, the British built a settlement which later grew rapidly when the North Borneo Chartered Company (BNBC) sponsored the migration of Chinese to Tawau.

A total of 2,900 Japanese soldiers of the 370th battalion under Major Sugasaki Moriyuki were taken as prisoners of war and transferred to Jesselton.

[16][17] At the end of the war, the town had been largely destroyed by bombing and fire; the Bell tower was the only intact pre-war structure.

[18] Due to its exposed location near the international border with Indonesia, Tawau became the main point of the conflict during the confrontation.

[19][20] Australian River-class destroyer escorts were stationed in Cowie Bay and a squadron of F-86 Sabre aircraft flew over Tawau daily from Labuan.

[23][24] At the end of January 1965, a night time curfew was imposed in Tawau to prevent attackers from contacting the approximate 16,000 Indonesians living there.

[19] On 28 June 1965, an attempt by Indonesian troops to invade eastern Sebatik was repelled by a heavy bombardment by Australian destroyer HMAS Yarra.

[25][26] In August 1965, an unknown assailant made an attempt to blow up a high-tension electricity pylon while in September 1965, a logging truck was destroyed by a land mine.

[34] Today, Tawau is one of the six districts involved in the eastern Sabah sea curfew that has been enforced since 19 July 2014 by the Malaysian government to repel attacks from militant groups in southern Philippines.

[43][44] The demographic landscape of Tawau, as highlighted in the Malaysian Census 2010 Report, portrays a rich tapestry of cultures and ethnicities.

Initially boasting a population of 397,673, with a subsequent adjustment excluding 57,466 individuals in the Kalabakan District, the municipality is a bustling port town situated in Malaysian Borneo.

[3][2][note 3] Its proximity to Indonesia and the Philippines has significantly influenced its demographic makeup, setting it apart from other areas in Sabah.

The population of Tawau is notably diverse, resembling major urban centers in the eastern coast of Kalimantan, such as Tarakan, Samarinda, and Balikpapan.

The non-Malaysian populace predominantly hails from Indonesia and the Philippines, originating from Sulawesi, Kalimantan, the Sulu Archipelago, Mindanao, and the Visayas.

Additionally, a small Pakistani community, primarily engaged in business ventures, contributes to the multicultural fabric of Tawau.

[47] In Tawau, the Malaysian Chinese community shares a historical narrative akin to their counterparts in other regions of Sabah.

[50][51] Religiously, most Bumiputera populations in Tawau are Muslims, with exceptions among the Kadazan-Dusuns, Lundayeh, and Muruts who mainly practice Christianity.

The association handles the cash-based trade of raw materials from Indonesia, but in recent years has focussed on timber industry.

Before the COVID-19 pandemic, the airport also offered international regional flights several times per week, including routes to Tarakan, Indonesia, operated by MASWings, and to Bandar Seri Begawan, Brunei, via RB Link.

In 2024, international flights resumed, adding various new overseas destinations, including Chengdu–Tianfu, Nanjing, Guangzhou, and Macau operated by Firefly and Batik Air.

Additionally, a Cessna 208 Caravan crashed on takeoff in 1995, and a MAS Boeing 737-400 skidded off the runway in 2001, though neither of these incidents caused fatalities.

[76] The maritime route has also being used for smuggling subsidised goods from the town to certain parts in Indonesia, especially southern Sebatik, by Indonesian smugglers as this area is highly dependent on Tawau.

17, Apas Parit, Merotai, Quin Hill, Balung Kokos, Titingan, Kinabutan and Burmas areas,[83] and the Tawau Prison is in the town centre.

[78][87][88] The hospital has undergone a series of modernisations since 1990 with the construction of specialist clinics, Central Sterile Services Department (CSSD), new wards and operation theatres.

The Tawau International Cultural Festival is an annual event, first held in 2011, that has been promoted for its potential to attract tourists.

[97] The Tawau Bell Tower in the town's park was built by the Japanese in 1921 shortly after World War I to mark the close allied relations between Japan and Great Britain.