In 1608, under James I what became known as the Plantation of Ulster began. This period saw the arrival of settlers from England and the building of walled towns designed in orderly patterns, unlike the clusters of huts that the Gaelic Irish lived in.

The district of Limavady was granted to Sir Thomas Phillips in 1612, who commenced the building of the present "Newtown of Limavady" about a mile and a half north of the earlier O'Cahan settlement. The town was granted a borough charter in 1613, and from then until the Act of Union in 1800 returned two members to the Irish Parliament. In 1870 the word Newtown was officially dropped from the name. On March 1st 1989 Borough status was officially reinstated.

One of Ireland's most famous melody's "The Londonderry Air" (more commonly known as "Danny Boy") was recorded in Limavady by Miss Jane Ross in 1851 from a tune she heard being played outside her window by a street fiddler.

A small collection of fine gold ornaments was discovered in the townland of Broighter just outside modern Limavady. The gold was discovered in 1892 by two local ploughmen. The collection was sold to the British Museum for the very poor sum of £600. The Royal Irish Academy then claimed the rare ornaments as a treasure trove but the trustees of the British Museum refused to release them. The matter was resolved in 1893 in the High Court in what became known as the Gold Ornaments trial. These beautiful objects can now be seen in the National Museum in Dublin.