The site of Blue, on Farm Road 696 eight miles west of Lexington in northwestern Lee County, was first settled around 1846 by three brothers, Joseph, William, and Isaac Jackson, who received a one-third league grant for service in the Mexican War. The settlement was originally named Blue Branch after a nearby stream. A local post office was established in 1879 with Lewis L. Williams as postmaster. The same year, a Methodist church was organized there, and a cotton gin was operating at about the same time. William Jackson operated a small chair factory. The community's post office closed in 1895 but was reopened in 1897, and the name of the settlement was shortened to Blue. In 1906 a one-room school at Blue had thirty-three students. The settlement began to decline after 1910. Its post office closed in 1913, and its school was consolidated with the Lexington Independent School District in 1941. In the mid-1930s the town comprised a school, a business, and several scattered dwellings. In 1945 its reported population was twenty-five. In the early 1980s the town was a dispersed rural community with a church and one business. The population was fifty in 2000.