As 19th century gave way to the 20th century the heavily wooded and mountainous area of Shades Mountain remained relatively undeveloped. The Shades Mountain region was difficult to develop because of its relative inaccessibility from the Birmingham area to the north. Access from Birmingham was limited by treacherous dirt roads that snaked up the mountain and became virtually impassible during rains and inclement weather. It was not until 1916, when Edgar Jones Smyer, the President of Title Guarantee Loan and Trust Company in Birmingham, completed the 3 1/2 mile stretch of road that ran from the present day Birmingham Water Works Filter Plant to the top of the mountain, that the area became accessible for development. Early settlement of the Shades Mountain region was given another boost in 1922 when a second portion of this road was completed creating the section of Shades Crest Road that runs between what is now Smyer Road and Highway 31.

Another of the early influential residents of the area was George Battey Ward, a former two-term Mayor of Birmingham who built his estate named "Vestavia Hills" atop Shades Mountain. Mr. Ward's fascination of the classical Greco-Roman era inspired his construction of replicas of the ancient Roman Temple of Vesta and Temple of Sibyl, which currently serves as a historical gateway into Vestavia Hills from the north.

Between 1924 and the late 1940's a number of adventurous settlers moved to the region and by 1950 the area population totaled 607 residents. From this point forward, Vestavia Hills grew at a rapid pace. In 1950, residents petitioned the Jefferson County Probate Judge to call an incorporation election to create the town whose name would reflect the influence of George Battey Ward. The incorporation election to create the Town of Vestavia Hills was held on October 24, 1950 and passed by a vote of 88 for and 8 against the proposition. The City was formally incorporated on November 8, 1950.

By late 1957 the population had grown by almost five times its size in 1950 to a total of 2,995 residents, and the Town of Vestavia Hills officially became a City. From the period 1956 to 1966 commercial development sprang up along the Montgomery Highway corridor. A series of annexations to the south of the city's boundaries led to a period of continued growth and by 1970 the population of Vestavia Hills reached a total of 8,311 residents.

The opening of the Red Mountain Expressway in 1977 and the creation of Vestavia Hills' own school system in 1970 spurred continued growth and the population by 1980 numbered 15,729 residents. The significant annexations of the Rocky Ridge and Altadena areas in the 1980's, Liberty Park in 1992 and Cahaba Heights in 2002 expanded both the population base, now numbering 30,400 residents, and the commercial base of the City of Vestavia Hills, Alabama.