A sweatshop or sweat factory is a cramped workplace with very poor and/or illegal working conditions, including little to no breaks, inadequate work space, insufficient lighting and ventilation, or uncomfortably or dangerously high or low temperatures. The work may be difficult, tiresome, dangerous, climatically challenging, or underpaid. Employees in sweatshops may work long hours with unfair wages, regardless of laws mandating overtime pay or a minimum wage; child labor laws may also be violated. Women make up 85 to 90% of sweatshop workers and may be forced by employers to take birth control and routine pregnancy tests to avoid supporting maternity leave or providing health benefits.

The Fair Labor Association's "2006 Annual Public Report" inspected factories for FLA compliance in 18 countries including Bangladesh, El Salvador, Colombia, Guatemala, Malaysia, Thailand, Tunisia, Turkey, China, India, Vietnam, Honduras, Indonesia, Brazil, Mexico, and the United States. The U.S. Department of Labor's "2015 Findings on the Worst Forms of Child Labor" found that "18 countries did not meet the International Labour Organization's recommendation for an adequate number of inspectors."

The phrase sweatshop was coined in 1850, meaning a factory or workshop where workers are treated unfairly, for example, by having low wages, working long hours, and living in poor conditions. Since 1850, immigrants flocked to work at sweatshops in cities like London, New York, and Paris for over a century. Many of them worked in tiny, stuffy rooms that were prone to fire hazards and rat infestations. The term sweatshop was used in Charles Kingsley's Cheap Clothes and Nasty (1850) describing how such workplaces create a ‘sweating system’ of workers. The idea of minimum wage and labour unions was not developed until the 1890s. This issue appears to be solved by some anti-sweatshop organizations. However, the phrase is still used because sweatshops are still common in countries around the world.

Many workplaces through history have been crowded, low-paying, and without job security; but the concept of a sweatshop originated between 1830 and 1850 as a specific type of workshop in which a certain type of middleman, the sweater, directed others in garment making (the process of producing clothing) under arduous conditions. The terms sweater for the middleman and sweat system for the process of subcontracting piecework were used in early critiques like Charles Kingsley's Cheap Clothes and Nasty, written in 1850, which described conditions in London, England. The workplaces created for the sweating system (a system of subcontracting in the tailoring trade) were called sweatshops and might contain only a few workers or as many as 300 or more. All those workers were illegally underpaid in terms of regular time and even overtime.

Between 1832 and 1850, sweatshops attracted individuals with lower incomes to growing cities, and attracted immigrants to locations such as London and New York City's garment district, located near the tenements of New York's Lower East Side. These sweatshops incurred criticism: labor leaders cited them as crowded, poorly ventilated, and prone to fires and rodent infestations: in many cases, there were many workers crowded into small tenement rooms.

In the 1890s, the National Anti-Sweating League was formed in Melbourne and campaigned successfully for a minimum wage via trade boards. A group with the same name campaigned from 1906 in the UK, resulting in the Trade Boards Act 1909.

In 1910, the International Ladies' Garment Workers' Union was founded in attempt to improve the condition of these workers.

Criticism of garment sweatshops became a major force behind workplace safety regulations and labor laws. As some journalists strove to change working conditions, the term sweatshop came to refer to a broader set of workplaces whose conditions were considered inferior. In the United States, investigative journalists, known as muckrakers, wrote exposés of business practices, and progressive politicians campaigned for new laws. Notable exposés of sweatshop conditions include Jacob Riis' photo documentary How the Other Half Lives and Upton Sinclair's book, The Jungle, a fictionalized account of the meat packing industry.