The Tennessee General Assembly established Grundy County in 1844 from parts of Warren, Coffee, and later, Marion Counties. It was named in honor of Felix Grundy, a Virginian who migrated to Tennessee by way of Kentucky. Grundy served in both the U.S. House and U.S. Senate and was attorney general under President Martin Van Buren.
The first County Court was held at Beersheba Springs and then at several individual homes near the present site of Altamont, which was established as the permanent county seat in 1848. The founding of Beersheba Springs and Pelham predated the formation of Grundy County.
Long associated with the economic history of the county, coal was discovered in the area of present-day Tracy City in the 1840s while Ben Wooten's sons were digging out a groundhog from beneath a stump. In 1848 a young Irishman, Leslie Kennedy, followed the construction of the Nashville and Chattanooga Railroad in search of moneymaking opportunities. While hiking through the Cumberland Plateau he became interested in coal outcroppings and returned to Nashville to seek financial backing for a coal mining venture. Nashville attorney William N. Bilbo listened to his scheme and bought the Wooten land and vast tracts belonging to the Samuel Barrell heirs, before heading to New York to find developers for the coal lands. Samuel Franklin Tracy and a group of financiers traveled to Tennessee and purchased Bilbo's holdings, which they used to form the Sewanee Mining Company with Tracy as president. When the Sewanee site proved less productive than expected, the mining company extended their tracks ten miles farther to the Wooten site, which became the town of Tracy City. The first coal was shipped from the site on November 8, 1858.
After the Civil War, creditors in New York and Tennessee won judgments against the company and bought the property. Arthur St. Clair Colyar, a Tennessee attorney, became the president of the new company, which became the Tennessee Coal, Iron, and Railroad Company in 1882. Colyar recognized the need for coke in the iron smelting industry and experimented with its production. In 1873 the company erected the famous Fiery Gizzard Coke Iron Furnace at Tracy City and produced fifteen tons of iron before it collapsed. That original furnace demonstrated the efficacy of Tracy City coal and determined the economic future of the city.
In 1869 developers Eugen H. Plumacher, John Hitz, and Peter Staub established a Swiss settlement, Gruetli. Among the Swiss immigrants to the settlement were the Angst, Amacher, Bonholzer, Schild, Flury, and Scholer families.
Monteagle, first called Moffat Station, was founded by John Moffat, an organizer in the temperance movement. In 1870 Moffat purchased the 1,146 acres of forest land on the Cumberland Plateau that became Monteagle. In 1882 the Monteagle Sunday School Assembly incorporated to promote the “advancement of science, literary attainment, Sunday school interest and promotion of the broadest popular culture in the interest of Christianity without regard to sect or denomination.” Andrew Nelson Lytle, the Vanderbilt Agrarian, did much of his writing at Monteagle, including his biography of Nathan Bedford Forrest.
The Summerfield community lies between Tracy City and Monteagle. There May Justice wrote more than sixty children's books. The community was also the site of the controversial Highlander Folk School from 1932 until 1962. This school, headed by Myles Horton, began as a training facility for labor organizers. In the 1950s, it became famous for its promotion of civil rights and the training of civil rights leaders.
In 1903 the Sewanee Coal, Coke and Land Company began mining coal in Coalmont, first called Coaldale. In 1908 the Sewanee Fuel and Iron Company bought the holdings and built coke ovens on the site. Coalmont is now the location of the new Grundy County High School and a privately operated state prison.
In 1918 the railroad was extended to Palmer, where the Tennessee Consolidated Coal Company opened up new coalmines. Pelham, located in the valley part of Grundy County, is a farming town and contains several small manufacturing businesses. In addition to these small industrial plants, Grundy County's economy includes a growing nursery industry and several hundred chicken broiler houses.
In 1972 the long efforts of Herman Baggenstoss of Tracy City led to the creation of the South Cumberland Recreation Area. It includes the Stone Door, Savage Gulf, Grundy Lakes, and Fiery Gizzard parks, which receive thousands of visitors each year.
Like so many Appalachian areas, Grundy County citizens have suffered through trying times, but continue to prosper. According to the 2000 census, 14,332 people lived in Grundy County.