Like nearby Babylon Village, Bay Shore in the late 19th and early 20th century was a town renowned for its shopping district and resorts; however it was never incorporated. Bordering the Great South Bay, Bay Shore became home to affluent Long Islanders desiring to erect large estates on the bay. It was also a tourist spot during the summer, as the newly built Long Island Railroad enabled wealthy New York City residents to escape the city.

According to the Suffolk County Film Office, the Biography movie studios started filming in 1902 in Bay Shore. The Keystone Kops had their start in Bay Shore, as did the early "Our Gang" shows. The film cameras needed the bright light reflected by the ocean.

After World War II, middle-class housing was developed on farms in Bay Shore. In 1961, on five acres in Bay Shore, Entenmann’s built what is still the largest baking facility of its kind in the United States.

Unfortunately the town suffered a major and unforeseen decline in the late 1960s. Ideas as to what may have influenced the downfall include a stagnant economy, the building of the South Shore Mall (currently Westfield Shopping Center of Bay Shore) in North Bay Shore and much more significantly, a lack of being incorporated. Without a local government, Bay Shore’s prominent residents were unable to make local decisions that were left to the county. Much of Main Street’s storefronts became dilapidated and even worse vacant. The luxury Cortland Hotel along with other historical sites were closed, the parks were left unkempt and in need of repair, storefronts became empty, and digusted affluent residents relocated. Facilities and restaurants on the waterfront Great South Bay fared slightly better, partly because of its being an embarkation point for ferries to Fire Island; unaccessible by private automobiles.

Several attempts were made at suburban regeneration from the 1960s through the 1990s, however none came to fruition. One of those plans was an attempt to realign Montauk Highway onto two parallel two-lane one way streets, leaving downtown Main Street for pedestrians only. A planned aquarium appeared to have fallen through along with many other invigorating ideas. However efforts seem to be having a significant positive effect; a former movie theater was rebuilt and expanded into an attractive YMCA. Redeveloping Main Street is a focal point and efforts include the new sidewalks, antique streetlights, new landscaping, and the rebirth of the parks. More importantly on Main Street is the occupancy of storefronts with many new high-end restaurants, clothing stores, and the feel of an old-fashioned village. It seems it has been drawing a more upscale clientele and gradually spreading from west to east leading to Bay Shore’s revival.

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