The name probably comes from Celtic Wininicas, "the white area" - a description of the pale limestone of Wenlock Edge, the long escarpment that runs southwest from the town for about twenty miles. "Much" was added later to distinguish this place from Little Wenlock a few miles north. By the time of the Domesday Book in 1086 it was already a substantial settlement of seventy-three households grown up around an Anglo-Saxon abbey founded in about 680 by Merewalh, son of King Penda of Mercia. Penda installed his daughter Milburga as abbess in 687, and her shrine drew pilgrims for the next eight centuries. The abbey was burned by Viking raiders around 874, refounded by Lady Godiva and her husband Leofric in the 1050s, and rebuilt by the Cluniacs after the Norman Conquest. The ruins of that Cluniac priory survive on the edge of town, in the care of English Heritage.

William Penny Brookes was born in Much Wenlock in 1809, took his medical degree, travelled to Padua and Paris, and came back to practise as the town's surgeon - the same year, by coincidence, that another Shropshire boy named Charles Darwin was born up the road in Shrewsbury. Brookes was a serious man with a serious mission. He believed physical exercise was essential to working-class welfare. In 1841 he founded the Wenlock Agricultural Reading Society, a working men's lending library. In 1850 he proposed something more ambitious: an annual public games. The first Wenlock Olympian Games included foot races, cricket, quoits, football, and what Brookes called "old English sports" like tilting at the ring on horseback. By 1859 he was sending prize money to athletes in Athens at a Greek Olympic revival. By 1866 he had organised the first National Olympian Games, held at Crystal Palace in London.

Brookes had been corresponding with Coubertin since 1889, exchanging ideas about physical education. When Coubertin visited in October 1890 - a special games was staged in his honour - the older man laid out his decades of work. Coubertin was deeply moved. Two years later he convened the conference at the Sorbonne that founded the International Olympic Committee. Athens, 1896. The whole modern Olympic movement began. Brookes died on 10 December 1895, just four months before the first modern Games opened. He never saw them. But the medal he had struck in his own town - the Wenlock Medal - is now buried inside the Olympic medals awarded at every modern Games as a small tribute to the man who would not let the Olympic idea die. The Wenlock Olympian Games are still held, every July, across eight venues in Shropshire.

When London won the right to host the 2012 Summer Olympics, the organisers chose two mascots for the games - one for the Olympics, one for the Paralympics. The Olympic mascot was a single-eyed creature made of polished steel. They called him Wenlock, after the town. On 30 May 2012, the Olympic flame was carried through Much Wenlock on its torch relay across Britain, in deliberate acknowledgement of where the modern movement had begun. The town's secondary school is now called William Brookes School. The Raven Hotel still displays copies of the Coubertin letters. Streets are named for the Brookes family. A small museum in the Corn Exchange tells the story to curious visitors. Most of them, when they arrive, have no idea what they are about to learn.

Much Wenlock is also the kind of place that breeds quiet imaginations. The novelist Mary Webb - born Mary Meredith in 1881 - grew up at The Grange just outside the town from 1882 to 1896. Her later novels, Gone to Earth and Precious Bane, were rooted in the Shropshire hills she walked as a girl. A. E. Housman set poems here in A Shropshire Lad - "On Wenlock Edge the wood's in trouble; / His forest fleece the Wrekin heaves" - and Ralph Vaughan Williams turned six of them into the 1909 song cycle On Wenlock Edge. The classicist Dame Mary Beard was born here in 1955. The actress Gabrielle Drake lives in part of the old priory complex. Robert Bateman painted his Pre-Raphaelite woodlands a few miles outside the town. In 2019 The Sunday Times named Much Wenlock one of the best places to live in Britain. The locals were not surprised. They had known for some time.