During the seventeenth century Malmesbury's main economic activities continued to centre around cloth production. In addition, the town remained a major marketing centre for the surrounding agricultural land. This was demonstrated by a Royal Charter of 1635 which gave the town two new annual livestock fairs.
Despite Charles I having issued a renewed charter for Malmesbury, the town generally favoured the Parliamentarian cause at the start of hostilities in the Civil War. Its strategic location, on the road from Bristol to Oxford, both initially Royalist, made it a key target for the King. Through the course of the Civil War Malmesbury changed hands at least seven times. The events of 1643 demonstrate the strife the town endured. At the start of the year the town was held by the Royalists, at the end of March it was taken by Parliament with Sir Edward Hungerford put in charge. Sir Edward changed sides so the town was back in Royal control. At the beginning of 1644 Parliament re-took the town, this time with a firmer grip, keeping it in their control until the fighting ceased. In 1646 Parliament ordered the destruction of the town walls, ensuring the town could not be a defended place in the future.
The fabric of the Abbey buildings seems to have been in a poor way by the later seventeenth century as the west tower collapsed in 1660. This is recorded by John Aubrey as being the result of the townsfolk's exuberant celebrations of the Restoration.
The early years of the eighteenth century saw little change in the town though one incident of note was the fate of Hannah Twynnoy. In 1703, Hannah is believed to have been a servant at the White Lion Inn, which was hosting a touring menagerie. A tiger from said menagerie mauled Hannah whose curiosity about the beast drew her too near its cage. On her gravestone, recorded in verse, is her sad demise. This can be seen in the Abbey graveyard.
Malmesbury continued to be a cloth town of standing until the middle of the eighteenth century when it all but vanished as competition intensified with the beginnings of mechanised production. Cloth manufacture was revived in the last decade of the century with opening of the water-powered Burton Hill Mill in 1793.
During this century the fame of Malmesbury lace began to spread. This was a cottage industry which survived into the early nineteenth century despite mechanisation due to the outstanding quality of the work produced.
In the latter years of the eighteenth century, Malmesbury was a noted 'rotten borough'. At this time Charles James Fox was its MP. C.P. Fox was renowned for his involvement in foreign affairs as well as for his support for parliamentary reform at home.
Malmesbury continued to be important for its location on the coaching road from Oxford to Bristol as well as being on the route south to Chippenham and north to Cirencester. This last was turnpiked in 1788. The road network brought travellers into the town, allowing inns to thrive as well as increasing Malmesbury's status as a commercial and administrative centre.