Although a 20th-century creation, the borough has Neolithic, Bronze Age and Roman heritage. It encompasses several former mill towns, which expanded and coalesced during the late 19th century as a result of population growth and advances in textile manufacture during the Industrial Revolution. Although some parts contiguous with the city of Manchester are highly industrialised and densely populated, about two-thirds of the borough is composed of rural open space; the eastern half stretches across the South Pennines.
For its first 12 years the borough had a two-tier system of local government; Oldham Council shared power with the Greater Manchester County Council. Since the Local Government Act 1985 Oldham Council has effectively been a unitary authority, serving as the sole executive, deliberative and legislative body responsible for local policy, setting council tax, and allocating budget in the district. The Metropolitan Borough of Oldham has two civil parishes and 20 electoral wards. Noted as one of the more unpopular amalgamations of territory created by local government reform in the 1970s, the Oldham borough underwent a £100,000 rebranding exercise in early 2008. The town has no listed buildings with a Grade I rating, and the borough's architecture has been described as "mediocre". There have been calls for the borough to be renamed, but that possibility was dismissed during the rebranding of 2008.
Part of Oldham is rural and semi-rural, with a quarter of the borough lying within the Peak District National Park. It also has high-density urban areas and suburbs and is a ‘Gateway to the Pennines’, located between the cities of Manchester and Leeds.
The Metropolitan Borough of Rochdale lies to the north-west, the Metropolitan Borough of Kirklees (of West Yorkshire) to the east, and the Metropolitan Borough of Tameside to the south. The City of Manchester lies directly to the south west and the Derbyshire Borough of High Peak lies directly to the south east, but Derbyshire is only bordered by high moorland near Black Hill and is not accessible by road.
Following both the Local Government Act 1888 and Local Government Act 1894, local government in England had been administered via a national framework of rural districts, urban districts, municipal boroughs and county boroughs, which (apart from the latter which were independent), shared power with strategic county councils of the administrative counties. The areas that were incorporated into the Metropolitan Borough of Oldham in 1974 had formed part of Chadderton Urban District, Crompton Urban District, Failsworth Urban District, Lees Urban District and Royton Urban District from the administrative county of Lancashire, Saddleworth Urban District from the West Riding of Yorkshire, and the politically independent County Borough of Oldham. By the early 1970s, nationally, this system of demarcation was described as "archaic" and "grossly inadequate to keep pace both with the impact of motor travel, and with the huge increases in local government responsibilities". After the exploration of reform, such as the proposals made by the Redcliffe-Maud Report in the late 1960s, the Local Government Act 1972 restructured local government in England by creating a system of two-tier metropolitan and non-metropolitan counties and districts throughout the country. The act formally established the Metropolitan Borough of Oldham as a local government district of the new metropolitan county of Greater Manchester on 1 April 1974. The district was granted honorific borough status on 23 November 1973 by Queen Elizabeth II of the United Kingdom, which allowed the council to have a mayor. The new dual local authorities of Oldham Metropolitan Borough Council and Greater Manchester County Council had been running since elections in 1973 however. The leading article in The Times on the day the Local Government Act came into effect noted that the "new arrangement is a compromise which seeks to reconcile familiar geography which commands a certain amount of affection and loyalty, with the scale of operations on which modern planning methods can work effectively".