Toronto is a commercial, distribution, financial and industrial centre. It is the banking and stock exchange centre of Canada, and is the country's primary wholesale and distribution point. Ontario's wealth of raw materials and hydroelectric power have made Toronto a primary centre of industry. The city and its surrounding area produces more than half of Canada's manufactured goods.

Toronto is located on a crossroads dating back to aboriginal times with an excellent harbour. The economy grew based on the settlement of Ontario. Toronto became the centre of railways and the supplier of goods to Ontario. Its status as a political centre gave it some stability during periods of economic uncertainty. Toronto saw a large boom after World War II when immigrants, especially from war-decimated Europe, chose the area to settle. Manufacturing, notably automotive manufacturing, grew to supply the growth in population. Toronto grew at a faster rate than the other great centre of Canada at the time, Montreal and surpassed it in the 1970s. Shipping by water was instrumental in Toronto's early growth but this has diminished to the point where the harbour is lightly used by industry. The area around Pearson Airport, the country's busiest airport, has become one of the largest industrial areas.

Further growth in the Toronto area is often attributed to the rise of Quebec separatism, though the extent of its influence is still contested by some, who argue that its effect was exaggerated by the English media. During the 1970s, the Quebec Liberal Party and the Parti Québécois enacted a series of French-language laws, which were perceived as unfavourable towards English-language businesses (especially multinational corporations, whose markets extended far beyond Quebec's borders) and English-speaking Montrealers. Some of the former (including the Bank of Montreal) and a number of the latter subsequently relocated to Toronto where French proficiency is not a necessity for business or employment.

In the past 25 years, Toronto has lost most of its manufacturing capacity, most of it moving to outlying suburbs in the Greater Toronto area, seeking lower land costs and land for expansion. This is not a new trend; it has been present for over 100 years. Early suburbs, such as West Toronto, developed for industry and were later engulfed by the expansion of the City of Toronto. West Toronto once had a large stock yards which has moved well north of the city. Much of the older industrial land has been converted into new residential neighbourhoods, supporting loft and condominium development and the industrial concerns have moved further away.

Toronto itself has diversified into service-based industries. It is the center of the English-speaking media industry in Canada, the advertising industry, the entertainment industry, the fashion industry, the pharmaceutical industry, the retail industry and the center of the financial industry in Canada. The area is a large site of computer software development. Toronto has also become the site of many headquarters of companies which have their primary activities elsewhere, such as mining and real estate, which need to stay close to the centre of finance. As Toronto developed, it has also developed its tourism industry, developing attractions such as the Rogers Centre and the live theatre.

As the business and financial capital of the country, Toronto hosts the Toronto Stock Exchange (TSX), the third largest stock exchange in the Americas by market capitalisation and eighth in the world (see List of stock exchanges for complete rankings) (as of Sept 3, 2009). The TSX has led North American exchanges by being the second to trade electronically and the first to become listed publicly. In the last decade, it outperformed many other stock exchanges worldwide. The financial district in Toronto centers on Bay Street, the equivalent to Wall Street in New York. Toronto is the third largest financial center in North America, after New York City and Chicago, with approximately 205,000 staff in the Canada's biggest banks and brokerages. In 2008, Forbes Magazine named Toronto the 10th most economically powerful city in the world, ahead of Madrid, Philadelphia and Mexico City.

The city's budget for the fiscal year 2008 was $8.170 billion and is funded primarily by property taxes (the net budget) totaling $3.322 billion.