The old settlement Rynestad was mentioned around the year 1600. The new city got its charter from king Christian II of Denmark in 1516. The town remained small for centuries. Following the Treaty of Roskilde in 1658, Ängelholm, together with the rest of Scania, was assigned by Denmark to Sweden. The town began to grow in the 19th century due to industrialization. It was also a garrison town until 1883 and had an airforce base between 1941 and 2009. The older spelling Engelholm was retained until 1912, when the city council decided to adopt a more modern spelling in line with the Swedish spelling reform of 1906. The high-performance car manufucturer Koenigsegg Automotive is based on the premises of the decommissioned F 10 Ängelholm airbase.
It is known for its claycuckoos — a special kind of ocarina. This is however a dying tradition as there is now only one producer of clay cuckoos, Sofia Nilsson. Ängelholm has the only orchestra of clay cuckoos in the whole world with which performed at the "Allsång på Skansen" in 2007.