Stanley was formerly divided into three distinct settlements — the main town of West Stanley and the mining villages of East Stanley and South Stanley. Through a process of gradual expansion, these have become amalgamated into one town, with East and South Stanley no longer officially used as town names (although they are still recognised colloquially). The village of South Moor lies to the south.
In John Speed's map of Co.Durham Stanley appears called Standley.
The West Stanley Pit Disaster, one of the worst coal mining disasters in British history took place in Stanley at West Stanley Colliery on 16 February 1909 when over 160 people were killed in the Burns Pit disaster.
Over recent decades, Stanley has suffered hard times economically, with the closure of the coal pits followed by the loss of major employers at Ever Ready in nearby Tanfield, as well as the closure of both the British Steel plant and Shotley Bridge General Hospital in the neighbouring town of Consett. Local businesses in Stanley town centre were also significantly affected by the development of the giant MetroCentre shopping complex in nearby Gateshead, with local trade decreasing as a result.
In 2000, Stanley briefly garnered attention in various national tabloid newspapers as well as BBC Radio 1's Chris Moyles Show when local curry house impresario Harresh Ramadan turned his Indian takeaway restaurant on Front Street into a fish-and-chip shop and renamed it Harry Ramadan's, a spoof on the more famous and well-known Harry Ramsden's chain, with signage in an identical font and colours. The Harry Ramsden's chain sued, citing breach of copyright, with Ramadan backing down shortly after the national publicity had subsided. Soon thereafter, the shop took on new ownership and adopted the new name Jump 4 Joy's before closing down entirely in 2001.
In October 2003, plans by Archer and Rostron Ltd. to convert the derelict King's Head pub into a private sex club to be re-christened The Love Shack caused controversy, with over 500 local residents registering formal objections to the plan. Faced with this opposition, the company dropped its proposals to open a swingers club on the site and instead converted the venue into a hotel and health spa called The Local Spa.
In 2005, the Office of the Deputy Prime Minister granted permission to plans to form a Stanley Town Council. This followed a campaign by local people, including a petition of over 2000 names, although this petition only represented 10% of the population that would be covered by the new Town council. Campaigners promised that the new Town Council would increase the pace of regeneration within the town.
In 2008, an arson attack left an historic building on Stanley Front Street in ruins along with a billiards club and several shops below. November 2008 saw the demolition of the burnt buildings.