Fitchburg's location on the Nashua River led to its development initially as an industrial center where mills were built to take advantage of the readily available water power. The construction of rail lines passing through Fitchburg on the Boston to Albany line increased the city's position as a manufacturing center. Heavy industries such as machine and tool works, clothing, and paper mills were the engines of significant growth throughout the 19th and early 20th centuries.

These heavy industries attracted large numbers of European immigrants to Fitchburg. The families that came seeking work usually chose to settle close to others with the same background, producing ethnic neighborhoods which retain much of their identity today. Already a diverse city, Fitchburg has seen its ethnic and racial diversity increase even further over the last decade. In addition to the groups which came to Fitchburg during the Industrial Era (Irish, Italian, Finnish, German, English, Welsh, French-Canadian, and many others), Fitchburg has added substantial numbers of Hispanics, Southeast Asians, and African Americans.

As a relatively large and prosperous city in a mainly rural area, Fitchburg developed into the primary commercial center for the region during the first half of the 20th century, with the downtown area growing into a popular shopping and entertainment zone. The demand for housing located within walking distance of Fitchburg's places of employment led to the development of a dense multifamily housing stock in the center of the city. Just over half of Fitchburg's housing units were built prior to World War II.

Since the 1960s, there has been a general trend of heavy industry migration away from the northeastern United States. The paper industry, one of the oldest and historically the largest in Fitchburg, has increasingly chosen to locate its pulp-to-paper mills closer to its northern pulping plants in order to reduce transportation costs. The erosion of the manufacturing base led to a less prosperous population, which in turn took its toll on Fitchburg's commercial sector. During this same period, the rise of the regional shopping center further diminished the role of Intown Fitchburg as a commercial center. This loss of more traditional industries has, in recent years, been mitigated by growth in non-manufacturing industries such as construction and professional services, as well as a rise in certain manufacturing industries such as plastics, medical goods and services, and chemicals.