Šavnik is a relatively new settlement, founded in 1861. It was populated by internal migrants from other parts of Montenegro, mostly craftsmen, which were needed by local farmers. The town quickly became a center for the Drobnjaci region, and incorporated a post office, school, primary court, and military post.
Industrialization during the SFR Yugoslavia era mostly bypassed Šavnik, so did any major transit road or rail links, so the economy of town went into stagnation. Population of Šavnik and entire municipality is since in slow but steady decrease. Most of the residents are migrating to Nikšić and southern Montenegro, and Šavnik is often a synonym for a poor and deteriorating town.
The future road Risan - Nikšić - Šavnik - Žabljak, and proximity of Žabljak as a main mountain tourist resort in Montenegro may boost Šavnik's economic prospects.