The club was formed as SV Vogelheim on 1 February 1907 out of the merger of two smaller clubs: SC Preussen and Deutsche Eiche. In 1910, Vogelheim came to an arrangement with Turnerbund Bergeborbeck that allowed the two clubs to field a football side. The footballers left in 1913 to set up their own club, Spiel- und Sportverein Emscher-Vogelheim, which changed its name to Spiel und Sport 1912 after World War I. Finally, in 1923, this side turned again to Turnerbund Bergeborbeck to create Rot-Weiss Essen.
In 1938, RWE broke into top-flight football in the Gauliga Niederrhein, one of sixteen premier divisions formed in the 1933 re-organization of German football under the Third Reich, and came within a point of taking the division title in 1941. In 1943 they played with BV Altenessen as the combined wartime side KSG SC Rot-Weiß Essen/BV 06 Altenessen. The next season this club was in turn joined by BVB Essen, but played only a single match in a stillborn season as World War II overtook the country.
The club returned to first division football in the Oberliga West in 1948, where a series of solid performances led to a divisional championship in 1952. The pinnacle of the club's success came with a 2–1 win over Alemannia Aachen in the 1953 DFB-Pokal final, followed by a national championship in 1955 when it beat 1. FC Kaiserslautern 4–3. The following season, Rot-Weiss became the first German side to qualify for the European Cup.
Their performance tailed off after this and RWE became just another mid-table side before they were relegated in 1961. The club then played most of the 1960s as a second division side, but did manage its first appearance in the top-flight Bundesliga in 1966–67. It returned to the Bundesliga for two seasons in 1969–70, and again, for four seasons beginning in 1973–74. Since then Rot-Weiss has been a solid second- or third-tier club, with just one season spent in the Oberliga Nordrhein (IV) in 1998–99.
The club has been plagued by financial problems that saw it denied a license in 1984, 1991, and 1994, leading to demotion from the 2.Bundesliga each time as a result. Bright spots during this period included winning the German amateur championship in 1992 and an appearance in the 1994 DFB-Pokal final, which they lost 1–3 to SV Werder Bremen.
RWE returned to the Regionalliga Nord (III) in 1999, and dropped still further to the Oberliga (IV) the next season. In 2004, they won promotion back to the 2. Bundesliga, but stumbled to a 17th place finish and were relegated once again. They reappeared in second division play on the strength of a first place Regionalliga finish, but narrowly missed staying up when they lost the critical final match of the 2006–07 season 0–3 to Duisburg. Rot-Weiss became a fourth division side following the introduction of the 3. Liga in 2008 and a fifth division team after insolvency 2010.
Until 2012 Rot-Weiss used to play in the Georg-Melches-Stadion (capacity 15,000), named in honour of a former club president. Since August 2012 RWE has played in the new Stadion Essen (capacity 20,000). The naming rights to the stadium include RWE AG.