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Birmingham was founded on June 1, 1871, by the Elyton Land Company whose investors included cotton planters, bankers and railroad entrepreneurs. It sold lots near the planned crossing of the Alabama & Chattanooga and South & North Alabama railroads including land formerly a part of the Benjamin P. Worthington Plantation. The first business at that crossroads was the trading post and country store operated by Marre & Allen. The site of the railroad crossing was notable for the nearby deposits of iron ore, coal, and limestone – the three main raw materials used in making steel.
Birmingham is the only place worldwide where significant amounts of all three minerals can be found in close proximity. From the start the new city was planned as a great center of industry. The founders, organized as the Elyton Land Company, borrowed the name of Birmingham, one of England's main industrial cities, to advertise that point. The growth of the planned city was impeded by an outbreak of cholera and a Wall Street crash in 1873. However, it began to develop shortly afterward at an explosive rate.
The town of Elyton, Alabama, and several other surrounding towns were absorbed into Birmingham in 1911. The start of the 20th century brought the substantial growth that gave Birmingham the nickname "The Magic City", as the downtown area developed from a low-rise commercial and residential district into a busy grid of neoclassical mid-rise and high-rise buildings and busy streetcar lines. Between 1902 and 1912 four large office buildings were constructed at the intersection of 20th Street, the central north–south spine of the city, and 1st Avenue North, which connected the warehouses and industrial facilities stretching along the east–west railroad corridor. This impressive group of early skyscrapers was nicknamed "The Heaviest Corner on Earth".
Birmingham was hit by the 1916 Irondale earthquake (magnitude 5.1). A few buildings in the area were slightly damaged. The earthquake was felt as far as Atlanta and neighboring states.
While excluded from the best-paying industrial jobs, blacks joined the migration of residents from rural areas to the city for its opportunities. The Great Depression of the 1930s hit Birmingham especially hard as sources of capital that were fueling the city's growth rapidly dried up at the same time that farm laborers, driven off the land, made their way to the city in search of work. New Deal programs put many city residents to work in WPA and CCC programs, making important contributions to the city's infrastructure and artistic legacy, including such key improvements as Vulcan's tower and Oak Mountain State Park.
The wartime demand for steel and the post-war building boom gave Birmingham a rapid return to prosperity. Manufacturing diversified beyond the production of raw materials. Major civic institutions such as schools, parks and museums, were able to expand their scope.
Despite the growing population and wealth of the city, its residents were markedly underrepresented in the state legislature. Although the state constitution required redistricting in accordance with changes in the decennial census, the state legislature did not undertake this until the early 1970s, when forced by a federal court case to enforce "one man, one vote". In addition, the geographic basis of the senate, which gave each county one seat, gave undue influence to rural counties. Representatives of rural counties also had disproportionate power in the state house, and failed to provide support for infrastructure and other improvements in developing urban population centers such as Birmingham. At this time, the General Assembly ran county governments as extensions of the state through their legislative delegations.
In the 1950s and 1960s Birmingham received national and international attention as a center of the civil rights struggle for African-Americans. Locally the movement's activists were led by Fred Shuttlesworth, a fiery preacher who became legendary for his fearlessness in the face of violence, notably a string of racially motivated bombings that earned Birmingham the derisive nickname "Bombingham".
A watershed in the civil rights movement occurred in 1963 when Shuttlesworth requested that Martin Luther King Jr., and the Southern Christian Leadership Conference (SCLC), which Shuttlesworth had co-founded, come to Birmingham, where King had once been a pastor, to help end segregation. Together they launched "Project C" (for "Confrontation"), a massive assault on the Jim Crow system. During April and May daily sit-ins and mass marches organized and led by movement leader James Bevel were met with police repression, tear gas, attack dogs, fire hoses, and arrests. More than 3,000 people were arrested during these protests, almost all of them high-school age children. These protests were ultimately successful, leading not only to desegregation of public accommodations in Birmingham but also the Civil Rights Act of 1964.
While imprisoned for having taken part in a nonviolent protest, Dr. King wrote the now famous Letter from Birmingham Jail, a defining treatise in his cause against segregation. Birmingham is also known for a bombing which occurred later that year, in which four black girls were killed by a bomb planted at the 16th Street Baptist Church. The event would inspire the African-American poet Dudley Randall's opus, "The Ballad of Birmingham", as well as jazz musician John Coltrane's song "Alabama".
In 1998 the Birmingham Pledge, written by local attorney James Rotch, was introduced at the Martin Luther King Unity Breakfast. As a grassroots community commitment to combating racism and prejudice, it has since then been used for programs in all fifty states and in more than twenty countries.
In the 1970s, urban-renewal efforts focused around the development of the University of Alabama at Birmingham, which developed into a major medical and research center. In 1971, Birmingham celebrated its centennial with a round of public-works improvements, including an upgrade of Vulcan Park and the construction of a major downtown convention center containing a 2,500-seat symphony hall, theater, 19,000-seat arena, and exhibition halls. Birmingham's banking institutions enjoyed considerable growth as well and new skyscrapers started to appear in the city center for the first time since the 1920s. These projects helped diversify the city's economy but did not prevent the exodus of many of the city's residents to nearby independent suburbs. In 1979, Birmingham elected Dr. Richard Arrington Jr. as its first African-American mayor.
The population inside Birmingham's city limits has fallen over the past few decades, due in large part to "white flight" from the city of Birmingham proper to surrounding suburbs. The city's formerly most populous ethnic group, non-Hispanic white, has declined from 57.4 percent in 1970 to 21.1 percent in 2010. From 340,887 in 1960, the population was down to 242,820 in 2000, a loss of about 29 percent. By 2009 Census estimates placed Birmingham's population at 230,650. That same period saw a corresponding rise in the populations of the suburban communities of Hoover, Vestavia Hills, Alabaster, and Gardendale, none of which were incorporated as municipalities until after 1950.
Today, Birmingham has begun to experience something of a rebirth. New resources have been dedicated to reconstructing the downtown area into a 24-hour, mixed-use district. The market for downtown lofts and condominiums has increased, while restaurant, retail and cultural options are also beginning to expand. In 2006, the city's visitors bureau selected "the diverse city" as a new tag line for the city. In 2011, the Highland Park neighborhood of Birmingham was named as a 2011 America's Great Place by the American Planning Association. In 2015, the International World Game Executive Committee selected Birmingham over Lima, Peru and Ufa, Russia, for the 2021 World Games, but the event was delayed a year due to the COVID-19 pandemic. Even with this resurgence, by the 2020 census Birmingham had lost its long-standing status as Alabama's largest city with Huntsville overtaking Birmingham in total population, though Birmingham remains the state's largest metropolitan area. Birmingham hosted the 2022 World Games in July 2022.