Despite the late birth of the town there has been occupation in the area since the Neolithic period. Two stone-axes have been found. These may have been the earliest farmers in this area to clear wooded areas so that they could lay out their first fields. The probable burial mound of a Bronze Age inhabitant of the area is also recorded at Wheatley Grange.

However, in 1845 the seeds for the town's growth were planted when Charles Atwood took advantage of the local supply of iron ore and built an iron works. Six years later the population has increased to over 2000 people and by 1880 there were over 5000 people living here.

Six blast furnaces were built and they were fuelled by coal from the nearby collieries, such as Black Prince, Royal George and West Edward. The coal was not burned in its raw farm. Instead it was first turned into ccoke; the remains of the Inkerman coke ovens can still be seen.

Sadly, Atwood's iron works closed by 1882 and work transferred to his other ironworks at Spennymore. Nonetheless, other ironworks continued to provide employment and coal mining continued as late as 1969.

The town mainly grew up around the ironworks, spreading up the hill and along the line of the old droving road the A68. In 1911 a row of six houses for retired miners was built at Daleview. More houses at Weardale Crescent and Coronation Avenue were completed in the 1930s and further estates were built in the 1950s and 1960s.

With the end of the iron works and the death of the mine the town has shrunk in size. Although the population is down to only about 2000 this has not stopped Tow Law having a strong community and a deep sense of its past. This was expressed by the repair and display of some of the coke ovens at Inkerman, as a reminder of the former importance of the iron working industry.