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Bay City, the county seat of Matagorda County, is an incorporated city at the junction of Hwys 35 and 60, in the north central portion of the county 90 miles southwest of Houston. The community is named for its location on Bay Prairie, between the richly productive bottomlands of the Colorado River and Caney Creek.

It was established in 1894, when David Swickheimer and two other men formed the Bay City Town Company. Planning that Bay City would one day supplant Matagorda as county seat, the men selected two cow pastures on Bay Prairie as the site for a new community.

Between 1960 and 1970 an airport was built, and a barge canal was constructed to link Bay City to the Gulf Intracoastal Waterway. Between 1980 and 1990 the city's population rose from 14,291 to 19,684, and the number of businesses increased from 335 to 391.

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