The town of Edam was founded around a dam crossing the river E or IJe close by the Zuiderzee, now known as the IJsselmeer. Around 1230 the channel was dammed. At the dam goods had to be transferred to other vessels and the inhabitants of Edam could levy a toll. This enabled Edam to grow as a trade town. Shipbuilding and fishing brought Edam more wealth.

Count Willem V of Holland granted Edam rights as a borough in 1357. One of the reasons he did that was because of the war between the Hoeken and the Kabeljauwen. They fought a battle for the rule over the towns of Holland.

Thanks to their rights as a borough, the people of Edam transferred make a new harbour. The building of the new harbour gave Edam connections to the major cities in Holland and the international trading routes. By the 16th century there were as many as 33 wharves in Edam, which, along with the fact that Edam was also granted the right to hold a market three times every year, provided a great boost to the local economy – making it one of the more important towns of North Holland, vying with Enkhuizen, Hoorn and Amsterdam.

However, the open sea mouth caused flooding problems in the hinterland and in 1544 the Emperor Charles V gave orders to close the harbour with lock gates, which were built in the town centre in 1569. This resulted in the harbour silting up and the ship building industry went into a decline by the end of the 17th century.

The cheese market was the primary resource of the economy of Edam in the 16th century. On 16 April 1526 Emperor Charles V gave Edam the right to have a market every week. In 1594 this right was given in perpetuity by Prince Willem I as a mark of his appreciation for the town's support during the Siege of Alkmaar.