The town was named scir burne by the Saxon inhabitants, a name meaning "clear stream" (see: Bourne). The town was made the capitol of Wessex, one of the seven saxon kingdoms, and King Alfred's elder brothers King Ethelbert and King Ethelbald are burried in the abbey. When the diocese of Winchester was split in 705, St Aldhelm became bishop of Sherborne. The Bishop's seat was moved to Old Sarum in 1075 and the church at Sherborne became a Benedictine Monastery. In 1539 the monastry was bought by Sir John Horsey and became a conventional church.
See the article Sherborne Abbey for more on the history of the of the abbey and town.
In the 12th century Roger de Caen, Bishop of Salisbury and Chancellor of England built a fortefied palace in Sherborne. The palace was destroyed in 1645 by General Fairfax, and the ruins are owned by English Heritage.