In 1906, the name of the town was changed to Sagay. The name was taken from the semi-spherical shell called "sigay", which can be found in the area.

The American influence seeped into every aspects of Sagay's life, politically and culturally. At this period of Sagay's history, land transportation began to supplant sea travel but the seaside community continued to flourish. The first public schools conducted in English were established.

Meanwhile, in 1907 the Insular Lumber Company, reputed to be the biggest hardwood mill in the world, was established in what is now called Barangay Fabrica. Though measures to prevent the destruction of Sagay's rich forest were made, reforestation programs failed. Later, the old forest areas were converted mostly into sugarcane fields and some into cornfields. With the exhaustion of the forest resources of Sagay, ILCO was phased out in 1975 and transferred to Hinoba-an.

Another major industrial development was the establishment of Lopez Sugar Corporation in the 1920s. Also during these years, sugar, copra, lumber and fishing became the important source of income for the inhabitants. The economic growth of Sagay brought about influx of migrants from Iloilo, Cebu and Bohol. This trend made Sagay a melting pot of Cebuanos and Ilonggos. With these developments, business and industry flourished.

During World War II, the factories were destroyed and the economy was in shambles. A Eusebio Lopez Memorial School Building in Barangay Paraiso, served as the incarceration area for captured Filipino soldiers and American pilots and soldiers. It also served as the headquarters of Fourth Flight Division of the Japanese Imperial Air Force whose airfield was located in Pula-Bunglas area in Barangay Malubon.

During the last days of the war, the Fourth Flight Division of the Japanese Imperial Airforce organized kamikaze or suicide units to be stationed here and in Bacolod. Known later as the Third Regiment Suicide Corps, of its 59 pilots and crews, 30 were killed in the Battle of Leyte Gulf in which they played a major role as kamikaze pilots.

The Pula - Bunglas area of Barangay Malubon served as the Japanese landing field for the Fourth Flight Division. It was also a site where the local soldiers, guerrillas and civilians, after Japanese spies identified them as guerrilla members or collaborators were forced to dig holes consequently executed and buried. Old residents believe that almost 1,542 people were buried here.

Barrio 3 Wharf, Fabrica, served as the transport point of processed lumber destined to Japan from Insular Lumber Company and also a docking area of Japanese supply ship during the war torn years. The Iglanggam Bridge at Barangay Tadlong was the dumping site of executed guerrillas and civilians. This is also known as the site where confiscated money, especially silver peso coins encased in concrete blocks, was dumped by the retreating Japanese soldiers.

Balibag Hill, Lopez Jaena, was where the resistance government of Free Sagay was established. It was also known as tabo-an or market place during the war and in 1944 a group of Japanese soldiers killed about 27 homeguards or "toltog" guerrillas. After the mass killing, the Japanese soldiers set the whole area on fire, burning the shanties and the dead. The Japanese puppet government was established at the Big House, Central Lopez, Paraiso. A Japanese barracks and checkpoint was established. A Japanese anti-aircraft still can be found inside the ground of the house.

At Brgy. Poblacion II, Japanese Zero fighters left bullet holes when they intended to destroy the water supply of the people during the last days of the war. The USAFE Base A training sitewas established at Tangnonon, Barangay Fabrica at the ancestral home of Lopez Kabayao.

On August 23, 1942, the first group of reservist in Negros were called on duty and they were trained here.

Combined Filipino and American forces liberated the province from the Japanese at the early part of 1945.

The seat of government was transferred to its present site, Dalusan. The transfer signaled the diminishing importance of sea travel and the take over of overland transportation as the conveyor of progress and development.

Schools, markets and commercial establishments were soon established. Provincial and national aid were extended to Sagay. More roads and school buildings were constructed, thousands of hectares of logged off area of the Insular Lumber Company were planted with coconut trees and sugarcane. Sherman Hill near Brgy. Bato was discovered to contain rich deposits of highest silica. The growing markets for sea products brought about unprecedented boom in the fishing industry for which the coastal waters of Sagay proved to equal the demand. The municipal population rose to more than 60,000 and the revenue increased.

In the 1960s, more schools were built and more linking the barangays to the town capital were constructed. The inefficient electrical system was updated. In 1967, Sagay Central Inc. was born, a new sugar mill at Barangay Bato, partly owned by the farmers. New areas were opened and planted with sugarcane. Today the new sugar mill factory is benefiting hundreds of small farmers.

In the 1970s, Sagay acquired a new town hall, a municipal gymnasium, a livestock auction market, public markets for number of barangays and municipal wharves in barangays Vito and Old Sagay.

On August 10, 1996, the town became Sagay City.

Sagay City is a two-hour travel by bus from Bacolod. Ceres Liner is the island's most used bus liner.

• Lopues Value Store, AE Marañon St. 
• Sagay City Market Mall, Rizal St.