Prior to the Norman Conquest Combe was held by Leofwine Godwinson.
One part of the village was known as Abbas Combe which was recorded in the Domesday Book of 1086–7 as Cumbe, when it was held by the church of St Edward, Shaftesbury.
The other manor within the parish was held by Earl Leofwine but after the Norman Conquest was given to Bishop Odo of Bayeux. It was his descendant Serlo FitzOdo who granted it to the Knights Templar.
The parish was part of the hundred of Horethorne.
Templecombe derives its name from Combe Templariorum, after the Knights Templar who established Templecombe Preceptory in the village in 1185. After they were suppressed in 1312 it was granted to the Knights of St John who held it until the Dissolution of the Monasteries, after which it was acquired by Richard Duke (d.1572) of Otterton, Devon. An attempt to discover 'the village of the templars' was made by the Time Team television series, in a programme first shown in 1996. Late in the investigation, an old tithe map revealed the location of the Templar site, and an old stone boundary wall was found to be still standing seven feet high.
The Manor House in the high street was built in the 17th century on the site of a medieval building. The 1st Earl of Cork Richard Boyle bought Temple Coombe Manor in 1637 for £20,000. The Earl already owned Stalbridge Manor in Dorset close by. The Earl of Cork also purchased Annery House near Bideford in 1640 for £5000.
Somerset by G.W. Wade and J.H. Wade (circa 1904) states, "Templecombe (or Abbas Combe), an inconsiderable village at the S.E. extremity of the county, with an important station on the S. & D. and L. & S.W. lines. The church is ancient but uninteresting, and seems to have been considerably altered. It contains a curious E.E. font. The tower is somewhat peculiar, and forms the S. porch. On the rising ground at the S. of the village are the remains of a preceptory of the Knights Templars, founded in the 12th century by Serlo Fitz-Odo. From this foundation the place takes its name. A long building, which was perhaps once the refectory, but which is now used as a barn, will be noticed abutting on a farm-house along the road to Milborne Port. In an orchard at the back of the farm are the ruins of a small chapel."
It was found by Time Team that the long building post-dated the Preceptory, having timbers dated to circa 1620; but that the chapel, since demolished, and with only footings remaining, was authentically Templar.
The Abbas and Templecombe parish council has responsibility for local issues, including setting an annual precept (local rate) to cover the council's operating costs and producing annual accounts for public scrutiny. The parish council evaluates local planning applications and works with the local police, district council officers, and neighbourhood watch groups on matters of crime, security, and traffic. The parish council's role also includes initiating projects for the maintenance and repair of parish facilities, as well as consulting with the district council on the maintenance, repair, and improvement of highways, drainage, footpaths, public transport, and street cleaning. Conservation matters (including trees and listed buildings) and environmental issues are also the responsibility of the council.
The village falls within the Non-metropolitan district of South Somerset, which was formed on 1 April 1974 under the Local Government Act 1972, having previously been part of Wincanton Rural District. The district council is responsible for local planning and building control, local roads, council housing, environmental health, markets and fairs, refuse collection and recycling, cemeteries and crematoria, leisure services, parks, and tourism.
Somerset County Council is responsible for running the largest and most expensive local services such as education, social services, libraries, main roads, public transport, policing and fire services, Trading Standards, waste disposal and strategic planning.
The village falls within the 'Blackmoor Vale' electoral ward. The most northerly parish is Mapperton with the most southerly being Henstridge. Corton Denham to the west is also included. The total population of the ward at the 2011 census was 5,450.
It is also part of the Somerton and Frome county constituency represented in the House of Commons of the Parliament of the United Kingdom. It elects one Member of Parliament (MP) by the first past the post system of election, and part of the South West England constituency of the European Parliament which elects seven MEPs using the d'Hondt method of party-list proportional representation.
The railway station is served by trains on the London Waterloo to Exeter St Davids West of England Main Line, originally built by the London and South Western Railway. When the village was served by the Somerset and Dorset Joint Railway, trains had to reverse into Templecombe station. This unusual characteristic was shared with Limerick Junction in County Tipperary in Ireland and also previously with Dorchester South. The station closed in 1966 due to the Beeching Axe, but re-opened due to local pressure in 1983.
Templecombe's largest employer is Thales Underwater Systems.
The parish Church of St. Mary dates from the 12th century, but was largely rebuilt in the 19th century. It has been designated as a Grade II* listed building. The church contains a panel painting discovered in a local cottage which has been carbon dated to around 1280 which is believed to be linked to the period when the Knights Templar held the village.
In Templecombe stands the United Reformed Church (next door to The Templars Retreat, formerly The Royal Wessex, Public House) This building has been on the site for over 150 years and was originally a congregational church.
General Sir Richard McCreery GCB, KBE, DSO, MC (1898–1967), Chief of Staff to Field Marshal Harold Alexander, 1st Earl Alexander of Tunis, at the time of the Second Battle of El Alamein and later commanded the British Eighth Army in Northern Italy during 1944–45, died in Templecombe.