Steel was first made by cementation, a process of heating bars of iron with charcoal in a closed furnace so that the surface of the iron acquired a high carbon content. The crucible method, originally developed to remove the slag from cementation steel, melts iron and other substances together in a fire-clay and graphite crucible. The famous blades of Damascus and of Toledo, Spain, were made by the cementation and crucible techniques.

The Bessemer process, the open-hearth process, and the basic oxygen process are more widely used in modern steelmaking. The open-hearth uses a type of furnace called a regenerative furnace; instead of a firebox at one end and a flue at the other, it has devices at each end for the intake and outflow of both fuel and air. The air is preheated by a system of current reversals that causes very high temperatures. This process, developed c.1866 by Sir William Siemens, uses iron ore and pig iron. In the basic oxygen process, or Linz-Donawitz process, developed in the 1950s, the design of the furnace is changed, and oxygen added to the air intake permits more rapid refining of the charge (material in the furnace). The electric-arc furnace is another modern development; it provides a means of making large quantities of high-grade steel, with the advantages of positive temperature control, freedom from contamination of the product by the fuel, and simultaneous deoxidation and desulfurization actions.

Steel is shaped for commercial use in rolling mills, where successive passages of the red-hot ingot between variously shaped rollers give it the desired form. Pittsburgh, one of the world's great steel centers, built its first rolling mill in 1811; Bessemer steel rails were rolled in Chicago as early as 1865.

Steel is often classified by its carbon content: a high-carbon steel is serviceable for dies and cutting tools because of its great hardness and brittleness; low- or medium-carbon steel is used for sheeting and structural forms because of its amenability to welding and tooling. Alloy steels, now most widely used, contain one or more other elements to give them specific qualities. Aluminum steel is smooth and has a high tensile strength. Chromium steel finds wide use in automobile and airplane parts on account of its hardness, strength, and elasticity, as does the chromium-vanadium variety. Nickel steel is the most widely used of the alloys; it is nonmagnetic and has the tensile properties of high-carbon steel without the brittleness. Nickel-chromium steel possesses a shock resistant quality that makes it suitable for armor plate. Wolfram (tungsten), molybdenum, and high-manganese steel are other alloys. Stainless steel, which was developed in England, has a high tensile strength and resists abrasion and corrosion because of its high chromium content.