Terry is at the junction of the Southern Pacific Railroad and Farm Road 1135, eleven miles east of Beaumont in central Orange County. Terry was one of the earliest stops in Orange County on the Texas and New Orleans Railroad and was probably named after J. T. Terry, trustee of the line in 1871. The town plat was originally filed in 1876, and a post office was secured the following year. George W. Polk, assistant land commissioner for the Southern Pacific Company, filed a revised plat in 1887. Another post office, named Pearl, was established in 1884 but renamed Terry Station in 1887. By 1889 the latter office had been closed, leaving only the main Terry post office.
Lumber, agriculture, and oil were the chief economic assets of the Terry area in the twentieth century. Seeking to capitalize on the Orange County lumbering boom, the Terry Lumber Company sawmill began operations in 1913, with C. E. Slade as president. By 1915, however, the company was bankrupt. Local farmers used a series of irrigation canals to grow rice and truck crops during the period. In 1908 Kichimatsu Kishi and a group of Japanese immigrants founded what was later known as Kishi Colony near Terry. Although oil was discovered at the Kishi farm in 1913, saltwater intrusions, a series of winter freezes, and the Great Depression proved devastating to local farmers. Before the economic setbacks, Terry's population had been about forty. In the mid-1970s only a few scattered residences and buildings remained.