There is evidence to suggest that Thame originated from an old Saxon settlement next to the river Thame, where the town's name was derived. Findings of jewelry and pieces of pottery have added strength to this.

Initially Thame was in the diocese of the town Dorchester until the beginning of the 19th Century. The St. Mary the Virgin Church was rebuilt in 1240 by Bishop Grossteste and contains work from every century since then. The church was the focus of the town, which was gradually built around it.

Thame retains much of its old world charm, and markets have been held there since 1230. The Bishop of Lincoln diverted the road from Aylesbury so that it passed right through Thame market. The Birdcage was originally built as a permanent market booth in the 16th century when it belonged to the Guild of St. Christopher. The building was also known to have housed prisoners of the Napoleon Wars whilst the officers were housed in the Spread Eagle.

The Reformation did not affect Thame dramatically, although in Thame Park there was a suppression of the Cistercian monastery. Lord William's Grammar School was founded in 1559 by Lord William, who was popular with the five Tudor monarchs.

In the 18th century the houses were built or altered to look Georgian, and Inns were introduced as traveling became more popular. These included the Spread Eagle and the Swan which are still used today. The town lost a lot of wealth at the beginning of the 19th century. It was very agricultural and these wages were extremely basic. At this time Rycotewood College used to be a Victorian Workhouse, reflecting the poverty.

The town began to expand and develop at the end of the 19th century when Chinnor Road was developed to house the workers who worked on the railway line that connected Thame, Oxford, London and High Wycombe. At the turn of the century Thame housed three thousand people. These days however there are in excess of ten thousand.

Thame has outgrown its originally agricultural status and is now a thriving industrial town, yet still maintaining the character and atmosphere of an ancient market town.