Katy is named for the Missouri-Kansas-Texas Railroad (commonly referred to as the "K-T Railroad", now a part of Union Pacific) that ran through Katy in the 19th century. Katy was once known as Cane Island, name from the fact that Katy was once a major sugar cane and rice producer.

Greater Katy is the term often used to refer to a suburban region on the west side of the Houston, Texas metropolitan area. The Katy area includes new upscale developments and master planned communities such as Wood Creek Reserve, Grayson Lakes, Seven Meadows (shown left), Firethorne and Grand Lakes. All of the “Katy area” lies in the city of Houston’s extraterritorial jurisdiction (ETJ), not Katy’s ETJ. This means that the areas of “Katy area” are controlled by the city of Houston.

Retail centers are springing up all throughout Katy to accommodate the rapid residential growth. The major retail growth is now being focused on the Katy Fort Bend Road near the east entrance to the Katy Mills shopping mall.

In addition to Christus St. Catherine Hospital and the recently opened Memorial Hermann Katy Hospital, there are currently three major hospital construction projects underway in the Katy area with Methodist Hospital and Texas Children's Hospital along I-10 and St. Luke's on Grand Parkway, just South of I-10. Completion is planned for 2010.