Fanling-Sheung Shui New Town was developed from the traditional market towns and villages around Fanling and Sheung Shui, within the present-day North District in the New Territories of Hong Kong. It was primarily developed in the mid 1980s. Connecting Fanling and Sheung Shui is an U-shaped main road called Ma Sik Road.

The Hong Kong government started developing new towns in the 1950s to accommodate Hong Kong's booming population. During the first phase of development, the newly developed towns were called "satellite towns", a concept borrowed from the United Kingdom, of which Hong Kong was a colony. Kwun Tong, located in eastern Kowloon, and Tsuen Wan, located in the south-west of the New Territories, were designated as the first satellite towns, when the urban area in Hong Kong was still relatively small, restricted to the central and western parts of Kowloon Peninsula and the northern side of Hong Kong Island. Wah Fu Estate was also built in a remote corner on the southern side of Hong Kong Island, with similar concepts but at a smaller scale.