Throughout the colonial period, Maryland's economy was based on one crop—tobacco. Not only slaves but also indentured servants worked the fields, and when they earned their freedom, they too secured plots of land and grew tobacco for the European market. By 1820, however, industry was rivaling agriculture for economic preeminence. Shipbuilding, metalworking, and commerce transformed Baltimore into a major city; within 60 years, it was a leading manufacturer of men's clothing and had the largest steel making plant in the US.

Although manufacturing output continues to rise, the biggest growth areas in Maryland's economy are government, construction, trade, and services. Maryland employees are the best educated in the nation, with more than one-third of those over age 25 possessing a bachelor's degree in 2000. With the expansion of federal employment in the Washington metropolitan area by 40% from 1961 to 1980, many US government workers settled in suburban Maryland, primarily Prince George's and Montgomery counties; construction and services in those areas expanded accordingly. The growth of state government boosted employment in Anne Arundel and Baltimore counties. However, from 1992 to 2000, Maryland lost 17% of its federal employment in Washington DC. Also of importance to the economy are fishing and agriculture (primarily dairy and poultry farming) on the Eastern Shore and coal mining in Garrett and Allegheny counties. Manufacturing has shifted toward high technology, information, and health-related products. While manufacturing output has continued to grow (total of 6.5% from 1997 to 2001) its relative weight in the gross state product has fallen (from 8.5% in 1997 to 7.2% in 2001), as, over this same period, output from general services rose 33.7%, from financial services, 27.2%, from government services, 24.7%, and from the wholesale and retail trade sector, 21.4%. Annual growth rates averaged 6.2% 1998 to 2000, and only fell to 5.4% in the national recession and slowdown of 2001. Increased federal government spending, particularly in defense-related industries, is expected assure Maryland's economic recovery in 2002, and into 2003.

Maryland's gross state product was $195 billion in 2001, the 15th highest in the nation, to which general service contributed $48.4 billion; financial services, $42 billion; government, $34.3 billion, trade, $28.7 billion; transportation and utilities, $14.2 billion, manufacturing, $14 billion; and construction, $11.3 billion. The public sector constituted 17.6% of Maryland's gross state product in 2001, compared to a national state average of only 12%.