Highley began as a rural farming community, including an entry in the Domesday Book, later becoming a significant area for stone quarrying which provided some of the stone for Worcester Cathedral. Coal mining began in the area in the Middle Ages, but in the late 19th century the village was revolutionised by coal mining with large-scale operations beginning in 1878. A period of intense house-building also followed, giving Highley its distinctive red-brick terraced miners' houses. In the 1930s, the mine was extended to the neighbouring village of Alveley across the River Severn and a tunnel and bridge constructed between the two. There are also historical bridging points at Bridgnorth to the north and Bewdley to the south, and in Hampton Loade a private bridge used by the emergency services.

The mine closed in the late 1960s due to subsidence and waterlogging. The bridge remained open to bridleway traffic only, due to subsidence from the steep valley sides. The mine area on the Alveley (east) side was converted into an industrial estate in the late 1960s as coal mining ceased, and subsequently landscaped into the Severn Valley Country Park in the late 1980s. Initially this was as an exercise to use trees to shore up the coal spoils, and later as a tourist destination which now includes public artwork and a sculpture trail, the Seam Pavement Trail.

The trail is a series of seven bronze plaques depicting Highley's past and incorporates the designs of West Midlands artist Saranjit Birdi. He included many miner's nicknames into the artwork, gleaned from archive information and research within the local community. Nicknames of the miners, such as Dick the Devil, Joyful Clappers, Cider Biscuit, Flaming Heck and others, are incorporated into the work. Birdi calls it "a seam through time", echoing the skilfully mined coal seams being laid down and later extracted over time. One plaque, Plough and Lady, depicts Lady Godiva, who owned Highley Manor in the 11th century. Birdi is also responsible for another sculpture, A Song of Steam, at Highley station.

In 2000, the bridge was declared unsafe and a new footbridge constructed (completed 2006).

Highley was the village where 17-year-old murder victim Lesley Whittle lived, and from which she was abducted by Donald Neilson, the Black Panther, in 1975. Lesley, the daughter of bus firm owner George Whittle (1905-1967), was taken from her home on 13 January 1975 and found dead on an underground ledge beneath Bathpool Park near Kidsgrove, Staffordshire, on 7 March that year. Neilson was found guilty of murdering Lesley Whittle and three other people (as well as wounding a Dudley security guard, who later died having never fully recovered from his injuries) at his trial in the summer of 1976, and sentenced to life imprisonment.

in 1977 a feature film was made entitled 'The Black Panther'. The film is dark, unsensational, and accurately portrays the events leading up to Lesley's tragic death. Nielson is played by Donald Sumpter, and Lesley Whittle by Debbie Farrington. The film was widely banned by cinemas upon release, due to its violent content, and is available on DVD.