The arrival of the Rautaruukki steelworks changed the entire life of the town beginning from the 1960s. The population began to grow rapidly with the building of the factory. Today the factory provides employment for over 3000 men and the multiplier impact on the economy is great.

As the 1880s drew closer, the sailing ship era came to an end. Steamships began to take care of the foreign trade. At first the shipowners of Raahe did not believe in the triumphal march of the steamships, and therefore did not invest in them. Raahe, the busy shipping town turned back to a leisurely country town.

However, new schools were founded during the quiet period. The Raahe Burgher and Commercial School was founded in 1882 by the funds left by Johan and Baltzar Fellman. The Teachers’ College for Women was founded in 1896.

After the fire the town was quickly rebuilt. Houses were brought from the countryside, and some were even transported across the Gulf of Bothnia, from Sweden.

The largest and the most impressive building complex was naturally the new marketplace, Pekkatori, with its buildings. As a square composition, Pekkatori represents the closed corner square type conforming to the ideals of Italian Renaissance, and is one of the best preserved examples of its kind in Europe.

On the night of October 6, 1810 the growing town was faced with a disaster, a fire broke out. Three quarters of the town was destroyed, ie. about 60 houses, including the town hall with its records. The church, the schoolhouse, a few houses in Rantakatu and some small dwellings on the north side of the church hill were saved.

During the last decades of the 17th century the whole Finland was tried by the great years of crop failure. A large number of people, if not several hundreds, starved to death within Raahe. After the maelstrom of the years of famine the Great Northern War started. The Russian troops burned Raahe almost entirely in 1714. The handsome baroque town hall was destroyed, among other things. The whole town was deserted, those who could speak Swedish left for Stockholm or elsewhere Sweden. Others fled either to Northern Finland or to the woods for refuge.

Count Pehr Brahe, governor general, gave a charter to the town of Salo in 1649 with a purpose to build a town at Satamakangas, near the old harbour site. However, the harbour area had become so low that the future town was decided to be transfered. A new and better place was found further north, at the present bay of Raahe. Having acquired the possession of the parish of Salo in 1652, Pehr Brahe renamed the town. It became Brahestad, or Raahe in Finnish.

Old Raahe is one of the best preserved wooden towns of the 19th century in Finland. The northern part of the grid plan area, is preserved as an urban area for one-family houses, gives historical depth to today's steel town.