Mercy Academy occupied the site of a monastery established in Martin County by Christian Dominikus (Father Anastasius) Peters in the late summer of 1881. The monastery had been a Carmelite theological center for training young men. In 1894 the Academy of Our Lady of Mercy, an academy and day school, was established by the Sisters of Mercy under the leadership of Mother Mary Berchmans Kast, who came with Sister Agnes from St. Mary's Hospital in San Francisco, California, for that purpose. The school opened that fall with sixteen pupils. Accommodations were soon made for boarders, and by 1896 the enrollment had doubled. The rapid increase in student enrollment over the next few years prompted the sisters to buy the entire property of the Carmelites, which they converted into a convent and to which they added several buildings in 1902. Water was supplied by two windmills with cisterns. Since Mercy Academy was the only boarding school in this vast portion of West Texas, many area ranchers, including R. L. (Bob) Slaughter, sent their children there. The institution was especially popular as a finishing school for young ladies. From 1894 to 1912 the faculty consisted of five sisters and the mother superior; then, because of the great influx of students, a trip to Ireland to secure recruits was sanctioned, and eight more nuns were added. In 1913 the sisters decided to open branch schools in Pecos and Big Spring and to send some of the faculty to those points; also in 1913 they opened schools at Fort Stockton and Menard. In 1925 Mercy Academy received an accredited rating as a junior high school. A commercial course was included in its curriculum, as were departments of music, arts, and home economics.
During its history the academy had five superiors and more than 3,000 students, some from as far away as Ohio and California. After the Sisters of Mercy in the United States moved their novitiate to Webster Groves, Missouri, in 1929, many of the school's faculty members were transferred to other convents and hospitals. This move, plus the decrease of funds due to diminishing farm and ranch incomes, resulted in the academy's decline. On June 11, 1938, a tornado severely damaged the buildings and destroyed most of the school records. Subsequently, the school was moved to Slaton, in Lubbock County, where it continued as a parish school; Mercy Hospital in Slaton was also a byproduct of the institution. The property in Slaton was sold in 1944 to James E. Kelly, an area rancher, who remodeled the old convent buildings into a comfortable ranch headquarters. In the late 1980s Kelly family heirs still occupied the site, which has often been visited by Mercy Academy alumni.