The area is best known for its large dockyard, formerly the Royal Naval Dockyard Rosyth, construction of which began in 1909. The town was planned as a garden city with accommodation for the construction workers and dockyard workers. Today, the dockyard is almost 1,300 acres (5.3 km2) in size, a large proportion of which was reclaimed during construction. Rosyth and nearby Charlestown were major centres of shipbreaking activity, notably the salvage of much of the German fleet scuttled at Gutter Sound, Scapa Flow.

The associated naval base closed in 1994, and no Royal Navy ships are permanently based at Rosyth, though small ships now return for docking and refit activities, including Sandown-class minehunters. Rosyth's dockyards became the very first in the Royal Navy to be privatised when Babcock International acquired the site in 1987. The privatisation followed almost eighty years of contribution to the defence of the United Kingdom which spanned two World Wars and the Cold War with the Soviet Union, during which Rosyth became a key nuclear submarine maintenance establishment.

When the final submarine refit finished in 2003, a project to undertake early nuclear decommissioning of the submarine refit and allied facilities - Project RD83 - began pre-planning. The project was funded by MoD, in accordance with the contractual agreement in place following the sale of the dockyard, but management and sub-contracting was the responsibility of the dockyard owner, Babcock Engineering Services, a member of the Babcock International Group. The main decommissioning sub-contractor is Edmund Nuttall, and work began in 2006. The work was completed in 2010, when most of the areas occupied by the submarine refit facilities had been returned to brownfield status and were ready for redevelopment.

The project completed ahead of programme and under-budget, which is unusual in nuclear decommissioning activities. Some nuclear liabilities remain, including some quantities of contaminated ion-exchange resin which was the by-product of the former submarine refitting activity. The dockyard is the site for final assembly of the two Queen Elizabeth-class aircraft carriers for the Royal Navy's future carrier project.