Ashby is Anglo-Danish, meaning "farm by the ash trees," recorded in the Domesday Book of 1086 simply as Ashby. The Norman French addition came later, after the manor passed to the La Zouche family in the reign of Henry III. They held the place for over two centuries and left their name attached to it, even though their bloodline died out at the end of the 14th century. The hyphenated form became fixed slowly, and the locals still call it Ashby. The full name is what shows up on road signs, in legal documents, and in the running joke of British place-name peculiarity. Like many such names it survives largely because removing it would feel like erasing something.

In 1805 mineworkers at Moira Colliery, three miles west of town, struck a copious saline spring while working coal. The water was promptly recognised as therapeutic, and developers built the Moira Baths nearby with a hotel for travellers. Within a few years it was decided the spring's water should be piped to Ashby, where a grander building could attract a smarter clientele. The Ivanhoe Baths opened in 1822, a 200-foot Neo-Grecian structure with a Doric facade fronting Bath Street. The Royal Hotel, originally called the Hastings Hotel, opened in 1826 with a Doric porte-cochere to receive carriages. Rawdon Terrace, a row of Classical-style houses on Bath Street, dates from the same decade. Ashby's Regency spa boom was brief. The town never quite became Cheltenham. By 1960 the Ivanhoe Baths stood derelict, and in 1962 it was demolished. The Royal Hotel closed in February 2018. The water tower, the Doric porte-cochere, and the terrace are most of what survives of the spa era.

Walter Scott's novel Ivanhoe, published in 1819, set its great archery and jousting tournament "in the lists at Ashby-de-la-Zouch." Scott set the action in 1194, used the place name freely without ever visiting it as far as anyone can tell, and changed the town forever. Ivanhoe became a brand. The Ivanhoe Baths took the name. Ivanhoe School, founded in 1954, took it. The proposed rail reopening of the 1990s was called the Ivanhoe Line. The old market town now has streets named for Scott's characters and a school year-book of pseudo-medieval associations. The Hastings family memorialised in St Helen's Church, the late 15th-century Perpendicular Gothic building with a rare 300-year-old finger pillory, are the same Hastingses who actually built the castle Scott imagined his way around. Ivanhoe Runners, formed in 1985, organises the Ashby 20, a 20-mile road race held five weeks before the London Marathon. Finishers get a hoody and a cheese cob instead of a medal.

Edith Rawdon-Hastings, 10th Countess of Loudoun, died in 1874. Her widowed husband Baron Donington commissioned Sir George Gilbert Scott to design a memorial in her honour, and in 1879 an octagonal monument based on the medieval Eleanor crosses was erected at the junction of Bath and South Streets. It is the most striking object on the modern high street, a Gothic gesture in pale stone watching over Ashby's daily traffic. United Biscuits is now the largest employer, with around 2,000 jobs at its distribution centre and KP Snacks factory. McVitie's closed its biscuit factory in 2004 with the loss of 900 jobs. The video game company Rare, founded as Ultimate Play the Game, was based here before relocating. The town has Tesco, a few high-tech firms, an annual arts festival in May, and the September funfair the locals call "The Statutes," originally a Royal-statute hiring fair where farm workers and domestic servants signed on for the year. Ashby is twinned with Pithiviers in north-central France, a friendship founded on the shared experience of having difficult names to pronounce.