Sävsjö regards the date 1 October 1864, as the start of its current history, because it was then that the train station Sävsjö was inaugurated. At that time Sävsjö was nothing more than a few houses, but attracted by the railway it began expanding, attracting both industries and inhabitants. The settlement with its then 1.56 square kilometres had 1,481 people in 1917 at which time several small industries had established themselves there, most notably carpenters and other wood industries, and there was also a bank, a pharmacy and a post office.
In 1947 the rural municipalities Norra Ljunga and Vallsjö in which the settlement was situated were combined and formed the City of Sävsjö. Since the local government reform of 1971 Sävsjö is the seat of the much larger Sävsjö Municipality. The Swedish emigrant Jonas Bronck, founder of the borough The Bronx, New York City, was born outside of today's Sävsjö town in the hamlet of Komstad.