In the Middle Ages, a settlement was founded at the location of the current city by the Van der Goude family, who built a fortified castle alongside the banks of the Gouwe River, from which the family and the city took its name. The area, originally marshland, developed over the course of two centuries. By 1225, a canal was linked to the Gouwe and its estuary was transformed into a harbour. City rights were granted in 1272.
Around the year 1100, the area where Gouda now is located was swampy and covered with a peat forest, crossed by small creeks such as the Gouwe. Along the shores of this stream near the current market and city hall, peat harvesting began in the 11th and 12th centuries. In 1139, the name Gouda is first mentioned in a statement from the Bishop of Utrecht.
In the 13th century, the Gouwe was connected to the Oude Rijn (Old Rhine) by means of a canal and its mouth at the Hollandse IJssel was developed into a harbour. Castle Gouda was built to protect this harbour. This shipping route was used for trade between Flanders and France with Holland and the Baltic Sea. In 1272, Floris V, Count of Holland, granted city rights to Gouda, which by then had become an important location. City-canals or grachten were dug and served as transport ways through the town.
Great fires in 1361 and 1438 destroyed the city. In 1572, the city was occupied by Les Gueux (Dutch rebels against the Spanish King) who also committed arson and destruction. In 1577 the demolition of Castle Gouda began.
In 1551 was founded the oldest still functioning inn De Zalm, located on Markt 34, near the historic Waag building.
In 1574, 1625, 1636, and 1673, Gouda suffered from deadly plague epidemics, of which the last one was the most severe: 2995 persons died, constituting 20% of its population.
In the last quarter of the 16th century, Gouda had serious economic problems. It recovered in the first half of the 17th century and even prospered between 1665 and 1672. But its economy collapsed again when war broke out in 1672 and the plague decimated the city in 1673, even affecting the pipe industry. After 1700, Gouda enjoyed a period of progress and prosperity until 1730. Then another recession followed, resulting in a long period of decline that lasted well into the 19th century. Gouda was one of the poorest cities in the country during that period: the terms "Goudaner" and "beggar" were considered synonymous.
Starting in 1830, demolition of the city walls began. The last city gate was torn down in 1854. Only from the second half of the 19th century onward did Gouda start to profit from an improved economic condition. New companies, such as Stearine Kaarsenfabriek (Stearine Candle Factory) and Machinale Garenspinnerij (Mechanized Yarn Spinnery), acted as the impetus to its economy. In 1855, the railway Gouda-Utrecht began to operate. In the beginning of the 20th century, large-scale development began, extending the city beyond its moats. First the new neighbourhoods Korte Akkeren, Kort Haarlem and Kadebuurt were built, followed by Oosterwei, Bloemendaal, Goverwelle and Westergouwe after World War II.
From 1940 on, back-filling of the city moats and city-canals, the grachten, began: the Nieuwe Haven, Raam, Naaierstraat, and Achter de Vismarkt. But because of protests from city dwellers and revised policies of city planners, Gouda did not continue back-filling moats and city-canals, now considered historically valuable. In 1944, the railway station was damaged during an Allied bombardment, killing 8 and wounding 10 persons. This bombardment was intended to destroy the railroad connecting The Hague and Rotterdam to Utrecht.
After the war, the city started to expand and nearly tripled in size. New neighbourhoods, such as Gouda-Oost, Bloemendaal and Goverwelle were built. Over the last years there has been a shift from expanding the city towards urban renewal and gentrification.
Gouda is world-famous for its Gouda cheese, which is still traded on its cheese market, held each Thursday. Gouda is also known for the fabrication of candles, smoking pipes, and stroopwafels. Gouda used to have a considerable linen industry and a number of beer breweries.
The world-famous Gouda cheese is not made in the city itself but in the surrounding region. It derives its name from being traded in Gouda where the city council imposes stringent quality controls.
The economy of the city centre is based on tourism, leisure and retail, while offices are located at the outskirts of the city. Currently, there are over 32,000 jobs in the city, mainly in commercial and healthcare services.
Gouda is served by two railway stations: Gouda, and Gouda Goverwelle. The main railway station is served by Intercity services to The Hague, Rotterdam, and Utrecht and local trains to Amsterdam and Alphen aan den Rijn/Leiden.
The city also lies alongside the A12 and A20 motorways.