Shannon is a new town. Spearheaded by Brendan O'Regan, it was built in the 1960s on reclaimed marshland alongside Shannon Airport, along with the Shannon Free Zone industrial estate. The residential areas were intended as a home for the thousands of workers at the airport, surrounding industries and support services. Population growth was never as fast as planned throughout the first few decades of the town's existence. This was partly due to the proximity of 'friendly' places to live, such as Ennis town and Limerick city, or even the nearby village of Newmarket-on-Fergus.

The 'planned' nature of this town did not necessarily result in a successful town. It was lacking in facilities, and the town's shopping centre was also of poor design. Shops fronted onto pedestrian malls that were originally uncovered, allowing estuary winds and rain to strike at shoppers. The early low-cost housing (tower-block flats located in Drumgeely, near the airport) was poor-quality terraced housing.

Shannon was located in the parish of Newmarket-on-Fergus in the Roman Catholic Diocese of Killaloe, and at first a priest in residence of the airport served the population. In 1966 St. Senan’s School was opened and Mary Immaculate Church was built on Corrib Drive. On 24 December 1967 the parish of Shannon was created. For a short period a group of Dominican Sisters of England had a community in the parish. In 1974 they were replaced by the Sisters of Mercy. The church of Saints John and Paul was opened in Tullyvarraga in 1980. Other churches are the Adoration Chapel in and the Shannon Airport Oratory.

St. John’s Church of Ireland School was the first school established in Shannon in 1962. Christ Church Shannon opened in 1962, also serving members of the reformed faiths, but it is now closed. The Church of Ireland community is served by the Drumcliffe Union and the Methodist community is served by a lay pastor.

Shannon was the manufacturing base of GAC Ireland, which built almost all buses for CIE during its short existence between 1980 and 1986.