The town got its new name from the Talbot family, who were related to the pioneer photographer, Fox Talbot. They were patrons of Margam Abbey, an ancient Cistercian foundation, and also built Margam Castle (1830-1839, architect: Thomas Hopper), a mock Gothic residence, now partially restored and open to the public along with the surrounding park.
Christopher Rice Mansel Talbot (1803-1890) was a wealthy landowner (and Liberal member of Parliament for Glamorgan from 1830 until his death) who saw the potential of his property as a site for an extensive ironworks, which opened in early 1831. (This was just part of the industrialisation taking place across south Wales then; copper had been smelted at Neath since 1584, and there were tinworks and ironworks at Pontardawe.) CRM Talbot was also chairman and a major shareholder of the South Wales Railway.
His only son Theodore died in 1876 following a hunting accident. It was therefore his daughter Emily Charlotte Talbot (1840-1918) who inherited her father's fortune and became just as notable in the development of ports and railways. With assistance from engineers Charles Meik and Patrick Meik she set about creating a port and railway system to attract business away from Cardiff and Swansea. The Port Talbot Railway and Dock Company opened a dock at Port Talbot and the Llynfi Railway in 1897, followed by the Ogmore Valley Extension and the South Wales Mineral Junction Railway (almost all these lines were closed by the Beeching cuts in 1994, but some bridges and viaducts remain). By 1900, the dock was expoerting over 500,000 tonnes of coal; it reached a peak of over three million tonnes in 1923.
During the early twentieth century, the docks and a major steelworks attracted considerable investment, and this was followed by the siting of a chemical plant at Baglan Bay by British Petroleum.
In recent years, the town has seen a serious decline, caused by the withdrawal or cutting back of major employers. The borough council has been absorbed into the larger unitary authority of Neath Port Talbot.