The Town of Troy, like the rest of Montgomery County, was settled primarily by Scottish immigrants. In 1852, Angus McCaskill, one of the early settlers, donated a tract of 50 acres to the community to serve as the town proper. Until a legislative decree changed the name, the community was know as West's Oldfield. That same decree also located the courthouse in the new community and made Troy the business center of a thriving county.

The town takes its name from John B. Troy, a popular attorney and solicitor of the judicial district. Legend has it that the streets of Troy are paved with solid gold. When the streets were being paved, fill dirt was brought in from the gold mines in Eldorado, a once thriving mining community north of the town. Local citizens with a sharp eye found gold nuggets in the streets of the city. Even today, Troy still represents a golden opportunity for its citizens and visitors.