Founded about 1882 with the name of Orange, but the name was soon changed to Chipley after the railroad pioneer William Dudley Chipley. It grew up as many towns did along the railroad in the late 1800's, serving as as watering station for the steam-driven locomotives. Construction of a railway siding was completed in 1882 beside what was to become known as Tank Pond, near today's Agricultural Center and City Hall. A railroad siding is a section of track that allows a train to pull over to the side and off a mainline, through rail switches at both ends. Sidings can be used for several purposes.Water was pumped from the pond into an elevated tank, where the steam-driven locomotives stopped to re-supply. The locomotives also obtained supplies of wood for fuel.
Initial plans called for a town to be platted beside the railroad on a hill perhaps three or four miles east of Tank Pond, near the future site of the National Egg-Laying Test Site (Poultry Experiment Station). That site was then in Jackson County, a circumstance that prompted some of the Orange Hill and other Washington County promoters to seek a site in their county. They visualized county seat status for the proposed town, but they realized it could not be achieved in Jackson County. Marianna, then the largest town on the railroad east of Pensacola, had been well-established as the seat of government for Jackson County for half a century.
So the prospective promoters of the new town - Col D. H. Horne, Capt. Angus McMillan, Capt. G. W. Cook, Maj. W. J. Vankirk and J. M. Callaway, among others- approached Col. W. D. Chipley, manager of the new railroad, with the idea of moving the proposed town site into Washington County.
Col Chipley, persuaded by his friends, some of them former fellow-Confederate Army officers, accepted their proposal. Maj. Vankirk acquired title to 80 acres of land, which was then surveyed by Col. Horne, and would become the town's basic business district.
Soon after the site decision was made, the men named the town Chipley in honor of the railroad builder. As the town developed, however, its northern and eastern sections spread into Jackson County. That created problems, particularly for law enforcement and school officials, and that led to a border adjustment in 1915 that gave Chipley more Washington County "elbow room."
The first business enterprise was a wine shop that was established in 1881 by B. W. Berry, who also operated a pre-Prohibition Era whiskey distillery on land that nearly a century later would become Falling Waters State Park.
Berry's business however came to an end in 1899, when the Washington County electors voted by a narrow margin to prohibit the manufacture or sale of alcoholic beverages within its boundaries.