It was founded in 1147 as a daughter house of Clairvaux by Robert, Earl of Gloucester and was dedicated to the Blessed Virgin Mary. The abbey was dissolved by King Henry VIII of England in 1536 and sold to Sir Rice Mansel. From the Mansel family it eventually passed into their descendants in the female line, the Talbot family. In the 19th century, C R M Talbot constructed a mansion at Margam Castle which overlooks the abbey ruins. The nave of the abbey continued in use as the parish church, as it does to this day.
Margam Abbey now consists of the intact nave and impressive surrounding ruins. Those ruins not belonging to the church are now owned by the County Council. These remains, including the unusually large twelve-sided chapter house, dating from the 13th century, stand within 840 acre (3.4 km²) Margam Country Park, close to Margam Castle.
On a hill overlooking the abbey stand the ruins of an outlying monastery building, Capel Mair ar y Bryn (“the chapel of St Mary on the hill”). At one point in Margam’s history there were only 12 monks living in the monastery.