In the 1890s, Tawau, or Tawao as it was known then, was a small settlement of around 200 people who traded with Dutch merchants. In 1893, the British-owned ship "Normanhurst" arrived, offering to trade commodities such as Indian rubber and ivory for local products, including raisins and birds' nests.
The British North Borneo Company administered the area on behalf of the British Empire and gradually built up trade and local government in the early 20th century. Two very large plantations also were established--one British, one Japanese-owned--to produce coconuts, rubber and hemp for export.
Tawau became more prosperous in the 1930s due to its strong agricultural background. At this time, the town had more than 60 shops, alongside several churches and schools.
The Sabah region suffered greatly during World War II. Tawau was invaded by Japanese forces in January 1942 and remained under occupation until Australian troops liberated the area in June 1945. Many residents died during the occupation.
After the war, the British North Borneo Company was unable to rebuild the community and North Borneo became a British Crown Colony. Sabah gained its independence from the British Empire, as part of the new Federation of Malaysia, in 1963.
Tawau now is an important regional hub for both transport and commerce, although the surrounding area continues to be made up of plantations and smallholdings growing crops such palm oil, rubber and cocoa.
