Medieval towns began in many different ways. Some were fortifications erected as a response to ninth-century invasions. Other towns grew around great cathedrals (see "Churches and Cathedrals") and monasteries. Many other towns grew from the sites of Roman army camps or cities. Still others arose where a trade route crossed a river or a natural harbor allowed ships to moor easily.

Regardless of their origins, medieval towns had a few common characteristics. Each town had a marketplace, and most had a mint for the coining of money. The town also had a court to settle disputes. In addition, medieval towns were enclosed by walls. Townspeople supported themselves primarily by exchanging goods and services with one another, becoming artisans, shopkeepers, and merchants. They bought their food from the surrounding countryside and purchased goods from far away brought by traveling merchants.

No matter where people congregated, they settled on someone’s land and had to secure permission to live there from the king, count, abbot, or bishop. Aristocratic nobles and churchmen were sometimes hostile to the towns set up on their land, but they soon realized that these could be a source of profits and benefits.

The growing towns of medieval Europe slowly gained legal and political rights, including the rights to hold municipal courts, select the mayor and other municipal officials, and tax residents and visitors. Lords were often reluctant to grant towns self-government, fearing loss of authority and revenue if they gave the residents full independence. When residents bargained for a town’s political independence, however, they offered sizable amounts of ready cash and sometimes promised payments for years to come. Consequently, lords ultimately agreed to self-government.

In addition to working for the independence of the towns, townspeople tried to acquire liberties for themselves. In the Middle Ages, the word liberties meant special privileges. The most important privilege a medieval townsperson could gain was personal freedom. It gradually developed that an individual who fled his or her manor and lived in a town for a year and a day was free of servile obligations and status. Thus, the growth of towns contributed to a slow decline of serfdom in western Europe.