By the late fourteenth century Lavenham sat at the centre of the East Anglian woollen cloth trade. The town specialised in woad-dyed broadcloth - thick, heavy, dark-blue cloth called Lavenham Blue - and that single product made Lavenham one of the richest towns in England. By the late fifteenth century the village paid more in taxation than York or Lincoln, and four guilds were established by the merchant families who had grown wealthy from the cloth. The most important of these, founded in 1529 just before the Reformation began to bite, was the Guild of Corpus Christi. The Corpus Christi guilds across England were lay religious organisations dedicated to the Eucharist, sponsoring processions and feast-day plays. At Lavenham, this one was wealthy enough to build itself a hall.

The Guildhall stands at the corner of the market square. Its design makes extravagant use of jettying, the medieval technique of cantilevering upper storeys outward beyond the floor below, which displayed the timber framing as a visible statement of wealth. A gabled porch projects from the centre of the building on the north-west elevation. The structure is Grade I listed, the highest of the three English Heritage categories, reserved for buildings of exceptional interest. The dark oak and the close-set timbers make it look heavier than it is. Walking around it, you can see how the medieval builders showed off, exposing every joint and angle of the carpentry because the carpentry was what the wool money had bought.

The Reformation killed the guild within a generation of its founding. Henry VIII dissolved the religious confraternities along with the monasteries, and the building lost its original purpose. What followed was a long descent through the practical needs of a shrinking town. The Guildhall served as Lavenham's town hall, then as a prison, then as a workhouse for the local poor as the textile industry collapsed under competition from Dutch refugees making lighter, cheaper cloth in Colchester. During the Second World War, it was a British Restaurant, one of the communal canteens set up to feed people in towns where rationing made cooking at home difficult. In 1946, Sir William Quilter gave the building to the people of Lavenham, and it eventually passed into the care of the National Trust.

The museum inside the Guildhall traces the building's evolution through its various uses, with displays covering the medieval cloth trade and the more recent local history. One unexpected exhibit is the memorabilia from Lavenham railway station, which was a stop on the Long Melford to Bury St Edmunds branch line. The line closed to passengers on 10 April 1961, then to goods in 1965, joining the long roll of Suffolk branch lines wiped out in the Beeching era. The memorabilia is a memory of how Lavenham connected to the wider country before becoming the preserved village it is today, a place reached almost entirely by car.

From the air, Lavenham is a small, dense knot of buildings at the head of three valleys, with the great wool church of St Peter and St Paul rising at the southern edge and the Guildhall a darker block at the heart of the market square. Witchfinder General was filmed here in 1968, with the witch-burning scenes staged in front of the Guildhall. So was part of Stanley Kubrick's Barry Lyndon in 1975. The 487th Bomb Group at RAF Lavenham, a few miles south at Alpheton, used the village as off-duty country during the war: Brigadier General Frederick Castle, the highest-ranking Eighth Air Force officer to be awarded the Medal of Honor, drank at the Swan Hotel just up the street. His portrait still hangs there.