Much of the recent economic history of Cape Breton Island can be tied to the coal industry. The island has two major coal deposits:
- the Sydney Coal Field in the southeastern part of the island along the Atlantic Ocean drove the Industrial Cape Breton economy throughout the 19th and 20th centuries—until after World War II, its industries were the largest private employers in Canada.
- the Inverness Coal Field in the western part of the island along the Gulf of St. Lawrence is significantly smaller but hosted several mines.
Sydney has traditionally been the main port, with various facilities in a large, sheltered, natural harbour. It is the island's largest commercial centre and home to the Cape Breton Post daily newspaper, as well as one television station, CJCB-TV (CTV),[Note 1] and several radio stations. The Marine Atlantic terminal at North Sydney is the terminal for large ferries travelling to Channel-Port aux Basques and seasonally to Argentia on the island of Newfoundland.
Point Edward on the west side of Sydney Harbour is the location of Sydport, a former navy base (HMCS Protector) now converted to commercial use. The Canadian Coast Guard College is located nearby at Westmount. Petroleum, bulk coal, and cruise ship facilities are also located in Sydney Harbour.
Glace Bay is the second largest urban community in population and was the island's main coal mining centre until its last mine ceased operation in the 1980s. Glace Bay served as the hub of the Sydney & Louisburg Railway and also as a major fishing port. At one time, Glace Bay was known as the largest town in Nova Scotia, based on population.
Port Hawkesbury has risen to prominence since the completion of the Canso Causeway and Canso Canal created an artificial deep-water port, allowing extensive petrochemical, pulp and paper, and gypsum handling facilities to be established. The Strait of Canso is completely navigable to Seawaymax vessels, and Port Hawkesbury is open to the deepest-draught vessels on the world's oceans. Large marine vessels may also enter Bras d'Or Lake through the Great Bras d'Or channel, whereas small craft have the additional use of the Little Bras d'Or channel or St. Peters Canal. The St. Peters Canal is no longer used by commercial shipping on Cape Breton Island, but is an important waterway for recreational vessels.
The industrial Cape Breton area faced several challenges with the closure of the Cape Breton Development Corporation's (DEVCO) coal mines and the Sydney Steel Corporation's (SYSCO) steel mill. In recent years, the Island's residents have been attempting to diversify the area economy by investing in tourism developments, call centres, and small businesses, as well as manufacturing ventures in such fields as auto parts, pharmaceuticals, and window glazings.
While the Cape Breton Regional Municipality is in transition from an industrial to a service-based economy, the rest of Cape Breton Island outside the industrial area surrounding Sydney-Glace Bay has been more stable, with a mixture of fishing, forestry, small-scale agriculture, and tourism.
Tourism in particular has grown throughout the post-Second World War era, especially the growth in vehicle-based touring, which was furthered by the creation of the Cabot Trail scenic drive. The scenery of the island is rivalled in northeastern North America by only Newfoundland and Cape Breton Island tourism marketing places a heavy emphasis on its Scottish Gaelic heritage through events such as the Celtic Colours Festival, held each October, as well as promotions through the Gaelic College of Celtic Arts and Crafts.
Whale-watching is a popular attraction for tourists. Whale-watching cruises are operated by numerous vendors from Baddeck to Cheticamp. The most popular species of whale found in Cape Breton's waters is the Pilot whale.
The primary east-west road on the island is Highway 105, the Trans-Canada Highway, although Trunk 4 is also heavily used. Highway 125 is an important arterial route around Sydney Harbour in the Cape Breton Regional Municipality. The Cabot Trail, circling the Cape Breton Highlands, and Trunk 19, along the western coast of the island, are important secondary roads. Railway connections between the port of Sydney to Canadian National Railway in Truro are maintained by the Cape Breton and Central Nova Scotia Railway.
The Cabot Trail is a scenic road circuit around and over the Cape Breton Highlands with spectacular coastal vistas; over 400,000 visitors drive the Cabot Trail each summer and fall. Coupled with the Fortress of Louisbourg, it has driven the growth of the tourism industry on the island in recent decades. The Condé Nast travel guide has rated Cape Breton Island as one of the best island destinations in the world.