The Rhode Island economy had a colonial base in fishing and farming, each of which respectively became shipping and manufacturing upon independence.

The Blackstone River Valley was a major contributor to the American Industrial Revolution". It was in Pawtucket that Samuel Slater set up Slater Mill in 1793, using the waterpower of the Blackstone River to power his cotton mill. For a while, Rhode Island was one of the leaders in textiles. However, with the Great Depression, most textile factories relocated to southern US states. The textile industry still constitutes a part of the Rhode Island economy, but does not have the same power that it once had.

Other important industries in Rhode Island's past included tool making, costume jewelry and silverware. An interesting by-product of Rhode Island's industrial history is the number of abandoned factories—many of them now being used for condominiums, museums, offices, and low-income and elderly housing. Today, much of the economy of Rhode Island is based in services, particularly healthcare and education, and still to some extent, manufacturing.

The headquarters of Citizens Financial Group, the 14th largest bank in the United States, is located in Providence. The Fortune 500 companies CVS Caremark and Textron are based in Woonsocket and Providence, respectively. FM Global, GTECH Corporation, Hasbro, American Power Conversion, Nortek, and Amica Mutual Insurance are all Fortune 1000 companies that are based in Rhode Island.

Rhode Island's 2000 total gross state product was $33 billion, placing it 45th in the nation. Its 2000 per capita personal income was $29,685, 16th in the nation. Rhode Island has the lowest level of energy consumption per capita of any state. Additionally, Rhode Island is a rated as the 5th most energy efficient state in the country. As of Dec. 2010, the state's unemployment rate is 11.5%.

Health services are Rhode Island's largest industry. Second is tourism, supporting 39,000 jobs, with tourism-related sales at $3.26 billion in the year 2000. The third-largest industry is manufacturing. Its industrial outputs are costume jewelry, fabricated metal products, electrical equipment, machinery, shipbuilding and boatbuilding. Rhode Island's agricultural outputs are nursery stock, vegetables, dairy products and eggs.

Rhode Island's taxes were appreciably higher than neighboring states, because Rhode Island's income tax was based on 25% of the payer's federal income tax payment. Governor Carcieri has claimed that the higher tax rate had an inhibitory effect on business growth in the state and called for reductions to increase the competitiveness of the state's business environment. In 2010, the Rhode Island General Assembly passed a new state income tax structure that was then signed into law on June 9, 2010, by Governor Carcieri. The income tax overhaul has now made Rhode Island competitive with other New England states by lowering its maximum tax rate to 5.99% and has reduced the number of tax brackets to three. The state's first income tax was first enacted in 1971.