Katy, first known as Cane Island, is on Interstate Highway 10 and U.S. Highway 90 at the intersection of Harris, Waller, and Fort Bend counties, twenty-five miles west of downtown Houston. The name Katy may have been taken from the name Missouri, Kansas and Texas Railroad or from the name of the saloonkeeper's wife. Before 1890 the depot was operated by the Hennesey family on the Texas Western Railroad, a mile south of the platted town site. Peter Black and the families of former slaves Tom Robinson and Milto McGinnis were also in the area. In 1894 the Pitts family moved north of town, and in 1895 M. A. Beckendorff, a surveyor for Waller County, moved to Pitts Road. The Missouri, Kansas and Texas had built through the site of Katy by the end of 1893, but no station was located there at that time. J. E. Cabaniss, the first railroad agent in Katy, took up his duties there in 1895. The depot was finished in 1898, enlarged in 1919, then sold to the city of Katy in 1977. In 1990 the depot was a museum operated by the Katy Historical Society.
The Baptist and Methodist congregations were organized in 1898 and met either in homes or the school building until the Methodist church was built in 1904 for all to use. Katy had one-room schools circling the area; they were Schlipf, Sills, Stockdick, South Mayde, and Dischner. In 1919 the Katy Independent School District was formed; it registered 17,000 students in 1989.
The Katy post office opened in 1896, with J. O. Thomas and W. P. Morrison, who owned grocery stores, as the first and second postmasters. William Eule introduced rice farming to the dry-land farmers in 1901, and rice replaced cotton, peanuts, and corn. The farming community supported several businesses: Dr. J. M. Stewart and John H. Wright came to Katy in 1898 and formed Stewart and Wright Drug Store in 1904; Wright built the first telephone lines and ran a water system; Adam Stockdick and J. H. Hayes were realtors; the Owens, Clardy, and Cobb families owned hotels; Charlie Mares had a saloon; Trangott Kellner ran a meat market; and Cabaniss operated a rice and peanut warehouse and lumberyard. In 1904 Katy had a reported population of 119. The following year it had two hotels, two livery stables, two lumberyards, and a saloon. The town gained a private bank in 1914. The Katy State Bank followed and operated from 1922 to 1932. Katy National Bank opened in 1955 and was replaced with First Bank, Katy, in 1989.
The discovery well of the Katy gas field was drilled in 1934. The Humble plant (Exxon) was put into operation in 1943 with Joseph E. Clayton as superintendent. This plant, which extracted liquid hydrocarbons from gas, reached a peak production in January 1945 of 13,000 barrels a day. During World War II the size of the reserves and the proximity of Houston-area refineries combined to make Katy the most important gas-condensate field in the country. Development of the gas field resulted in a doubling of the population in Katy. From 1925 to 1942 it was reported at 400. It rose to 800 in 1943. The city of Katy was incorporated in 1945 with C. L. Baird as the first mayor and Arthur O. Miller and H. E. Romack as councilmen. After the 1940s the town continued to grow steadily. It reached a high of 9,866 inhabitants in 1988 before declining to 8,005 in 1990. By 2000 the population had increased to 11,775.