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The original village of Seaham has all but vanished; it lay between St Mary's Church and Seaham Hall (i.e. somewhat to the north of the current town centre). Until the early years of the 19th century, Seaham was a small rural agricultural farming community whose only claim to fame was that the local landowner's daughter, Anne Isabella Milbanke, was married at Seaham Hall to Lord Byron, on 2 January 1815. Byron began writing his Hebrew Melodies at Seaham and they were published in April 1815. It would seem that Byron was bored in wintry Seaham, though the sea enthralled him. As he wrote in a letter to a friend:

"Upon this dreary coast we have nothing but county meetings and shipwrecks; and I have this day dined upon fish, which probably dined upon the crews of several colliers lost in the late gales. But I saw the sea once more in all the glories of surf and foam."

The marriage was short-lived, but long enough to have been a drain on the Milbanke estate. The area's fortunes changed when the Milbankes sold out to 3rd Marquess of Londonderry, who built a harbour, in 1828, to facilitate transport of goods from locally encouraged industries (the first coal mine was begun in 1845). However, this harbour later proved inadequate to deal with the millions of tonnes of coal and the 6th Marquess commissioned engineers Patrick Meik and Charles Meik to reclaim land and extend and deepen the dock. It was officially opened in 1905. The harbour is of particular interest because it consists of a series of interconnecting locks, rather than the more typical two wall construction.

As early as 1823, the third Marquess had approached the architect John Dobson with a view to his drawing up plans for a town to be built around the harbour. Dobson did so, but the planned approach foundered for lack of funds, and the town instead grew in a more piecemeal fashion. To begin with, the town was itself called Seaham Harbour (to differentiate it from the ancient village); in time, though, the settlement as a whole came to be known as Seaham.

In 1928, production started at the last town colliery to be opened, Vane Tempest. By 1992, however, all three pits (Dawdon Colliery, Vane Tempest Colliery and Seaham Colliery – known locally as "the Knack") had closed, a process accelerated by the British miners' strike and cheap coal imports from Eastern Europe.[citation needed] The pit closures hit the local economy extremely hard, and Seaham sank into a depressed state in the 1980s and 1990s.[citation needed]

Seaham Colliery suffered an underground explosion in 1880 which resulted in the loss of over 160 lives, including surface workers and rescuers.

Many local families were affected by the tragic loss of eight men and one boy in the 'Seaham Lifeboat Disaster', when the RNLI lifeboat, the George Elmy, foundered on 17 November 1962. To commemorate the event, the new coast road was named George Elmy Lifeboat Way.