Ray City, which was formally named Ray's Mill, was located about one mile East of the present town on Ray's Mill Pond. Ray's Mill was named for Thomas M. Ray and retained that name for several years. The mill was operated by water from the pond and was used to grind meal and hominy grits from corn. Mr. Thomas Ray operated the mill until the time of his death. At one time, the mill was the gathering place of the community, where the men would take their corn to be ground. In 1909, Perry T. Knight, State Representative from Berrian County, introduced a bill to change the town's name to Ray City. The bill became a law on August 16, 1909 and Ray City became incorporated.
A business which contributed much to the new town of Ray City was the Luckie Lumber Company. It was located about one mile north of town on the rail line. There was a whistle stop by the name of Luckie. At the height of the mill's operation, tram railroads were build all over the area and were used for hauling logs to the mill where they were sawed into lumber. During the years of heavy rail traffic, the cutting of cross ties was a very lucrative business. The ties were used in the lying and maintenance of rail beds. They were hand hewn from cypress, which grew in the area.
The Great Depression had a devastating affect on Ray City. It suffered losses of many of its' businesses and its' people. As it sank deeper into economic depression, the passenger trains were discontinued and the depot was closed. Many buildings were torn down, however because of their faith, Ray City was saved.
The opening of Moody Air Force Base provided many badly needed jobs and helped restore Ray City's economic base. Not only has the base provided jobs for local civilians, but the military personnel assigned there, have been an added boost to the area. Many of the military families have chosen to live in Ray City permanently after their retirement.