At the beginning of the century, Towson remained largely a rural community. Land continued to be sold by the acre, rather than as home parcels. Most residences lay within Towson proper: no houses existed west of Central Avenue along Allegheny or Pennsylvania Avenues, and there were only three homes along the West Chesapeake Avenue corridor.In the 1910s, the Maryland State Normal School (MSNS) (now known as Towson University) was relocated to Towson.

The Maryland Legislature had established the MSNS in 1865 as Maryland's first teacher-training school, or normal school. The institution officially opened its doors on January 15, 1866, however as time passed enrollment in the school grew exponentially, which rendered the facilities inadequate. In 1910, the General Assembly formed a committee to oversee site selection, budget, and design plans for a new campus.

It settled on an 80-acre (320,000 m2) site in Towson. The General Assembly financed the $600,000 move in 1912. Construction then began in 1913 on the Administration Building, now known as Stephens Hall. In September 1915, the new campus, comprising Stephens Hall, Newell Hall, and the power plant, began classes.

The college underwent numerous name changes, settling on Towson University in 1997. As the growth of Baltimore's suburbs became more pronounced after World War II, considerable office development took place in Towson's central core area. Many of the large Victorian and colonial-style residences in the vicinity of the Court House were demolished in the 1980s and 1990s to make way for offices and parking. In 1839, Epsom Chapel became the first Christian house of worship in Towson, used by various denominations.

Due to population growth in the late 19th and early 20th centuries, several churches were built to serve the community, such as Calvary Baptist Church, Immaculate Conception Catholic Church, Trinity Episcopal Church, First Methodist Church, and Towson Presbyterian Church. Epsom Chapel was demolished in 1950 when Goucher College sold a portion of its property for development of the Towson Plaza shopping center, now Towson Town Center.

First Methodist Church moved in 1958 to land also acquired from Goucher College, and is now Towson United Methodist Church.Author Robert Coston, who grew up in the area of Towson now called "Historic East Towson", recalled in an interview the unique African-American history of that area during the mid-century: I think that the Towson, Maryland area that I am familiar with differs from other parts of Maryland because of the proximity to one of the largest slave plantations in the country.

The Ridgely Plantation which owned all of the property from Baltimore County to Baltimore City and other surrounding areas. ... This was a very unique place of which I have never heard of any equal to it. Every African American school age child in Baltimore County had to attend school at some point at Carver in East Towson.

... I realize now that as a youngster the older African Americans avoided talking about slavery or the nearby Ridgely Plantation because they themselves were not too far removed from slavery itself.