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Redcar means either place by the red marsh from the Old English rēad meaning red and Old Scandinavian kjarr or the first part of the name could be OE hrēod a reed, meaning "reedy marshland", referring to the low lying site by the sea that Redcar occupies. Redcar originated as a fishing town in the 14th century, trading with the larger adjacent market town of Coatham. Until the mid 19th century it was a sub-parish of Marske-by-the-Sea—mentioned in the Domesday book.

In 1846 work was completed on the Middlesbrough and Redcar Railway, created to attract tourism and trade, but like much of the Middlesbrough region, Redcar's real population expansion began with the discovery in 1850 of iron ore in the Eston area of the Cleveland Hills. After the construction of Redcar Racecourse in 1875, Redcar prospered as a seaside town drawing tourists attracted by its eight miles of sands stretching from South Gare to Saltburn-by-the-Sea.