The prosperity of Looe was based on deep sea trading, linked to the medieval wealth of east Cornwall (Liskeard and Bodmin were the two largest towns in Cornwall at the time) and the export of local agricultural produce, local fisheries, cloth trade and processing and the import of luxury goods.
Although changing trading patterns meant that by the early 16th century both towns were experiencing decline, by mid century the Newfoundland trade (fish from the Atlantic taken directly to Spain and the Mediterranean, with cloth, luxury and foodstuffs imported back to Britain) was so prosperous that the corporation of East Looe built on what had been the shoreline market area and the sandy foreshore beyond. This expansion into the estuary along
successive lines of the shifting sand bar has created parallel rows (of mostly 16th date) which now form the core of East Looe.
It was this ability to expand which enabled East Looe to dominate the estuary, becoming once again a major trading and shipping port throughout the 16th and 17th centuries, while West Looe experienced relative decline, becoming dependent largely upon fishing. Ancillary activities dependent upon the trade were the cloth trade and processing, fish curing and processing and corn milling; tide mills were already in operation locally by 1602. By the mid 18th century, the Newfoundland trade had declined, newly expanded deep water ports like Plymouth and Falmouth were taking the overseas trade, and Looe (East and West) concentrated on fisheries and coastal trade (largely export of corn and import and processing of limestone and other fertilisers). The economy of the towns was kept relatively buoyant by the proximity of the ever-expanding naval base and towns in Plymouth Sound, through trade, as an attractive residential area for local gentry and especially for naval officers, and because the continental embargoes of the Napoleonic wars stimulated the development of tourism (East Looe acquired a bathing machine in 1800) for just this class of visitor.
Mariners, fishermen and maritime tradesmen, merchant and trading houses (especially the corn-factors) continued to be major figures in the town, together with the increasingly important navy men. There were large numbers of specialist and luxury shops and professionals in the town in the period. The early 19th century was a period of quiet decay in Looe – trade did not increase after the end of war in 1815, the scaling down of the navy establishment affected the town. From about 1830 onwards, there was a revival in the Cornish coastal trade with small schooners trading in granite and copper ore, and Looe shared in the trade and profited from the shipbuilding boom thus stimulated, with important yards on the beach at Churchend. Fishing remained important and from 1870 the shift from seining to drift fishing in the Cornish pilchard fishery favoured a revival of the pilchard fishery in Looe. Shops and service trades increased with the growing tourist trade and the increasing numbers of wealthy residents, with expanding numbers of hotels and lodging houses.
There was a brief boom in fishing in the 1920s, 600 were employed and large boats built, but it had nearly all gone by 1930, although boatbuilding (largely yachts and leisure craft) continued with yards at Polvellan and Polean. Throughout this period, Looe became above all else a tourist town.