In 1820, Peter Lansett, a Canadian trader, was just one of the few that populated the soon to be Coal City area. Lansett collected coal from the ground and sold it to local blacksmiths and farmers, who formerly burned ears of corn for heat and energy. The more effective coal provided an economic boost for growth.

Mines started opening and towns developed around the mines. These towns included 1854 Gardner, 1858 Braceville, 1898 South Wilmington, 1875 Coal City, Clark City, Braidwood, Harrisonville, Sufferville, East Brooklyn, Central City, Godley, Richmond, Sandtown, Ramsey, Carbon Hill, Eileen, Torino, and Diamond. Miners lived within walking distance of the mines. In 1875 coal mine No. 3 was the first mine to sink, 1879 No. 4 sunk.

Coal City was incorporated in August 17, 1881 with a population of 900. The first Coal City Village Officials included President James Short; Village Clerk Henry Reese; Marshal Samuel Humter; Treasurer W.S. Kay; and Trustees John Brown, Montgomery Sharp, William Lindell, William Campbell, and William Homan.

Other small businesses started to develop during this time, including Coal City's first two buildings, the Coalfield Hotel, and Charles Fisher's Store. Coal mines owned company stores that supplied for the miners, these stores included shoes, groceries, dry goods, and meats. These purchases were then subtracted from the miners' paychecks.

The population fluctuated as old mines closed and new mines opened. As miners moved ghost towns developed.

In 1883, the Diamond Mine disaster occurred. 74 men and boys were killed. The miners that were digging at the bottom of one of the shafts hit a water table and water started rushing into the shaft. Within minutes the mine had flooded, trapping these men underground.

Strip mine, operations began in 1928. Dirt piled outside mine openings, as mining moved more of the landscape was destroyed. Now, these mounds of earth are filled with water and wildlife, forming man made lakes.

The Opera House was opened during 1920's and 1930's. The building still stands today. The Coliseum was open during the late 1920's and 1940's. The Coliseum held Saturday night dances with the local Barney Faletti Orchestra. Unfortunately The Coliseum burned in 1970.

In the 1940's the Doodlebug, a Santa Fe line traveled from Peoria then would stop in Chillicothe, Streator, Mazon, and then Coal City between 10:30 and 11:00. From there the Doodlebug would travel to Joliet, then up to Chicago.

November 6, 1984 Coal City and Eileen residents voted to annex Eileen into Coal City,

Coal City has grown and developed over the last 180 years. In 2000, it had a population of 3,900. Coal City's community includes the following churches Assumption Catholic Church, Christian Life Assembly of Life, First Baptist Church, New Hope Presbyterian Church, United Methodist Church and Religious Education Center. Coal City also has several organizations including Athletic Boosters, Coal City Area Baseball and Softball, Coal City Boy Scouts Troop #466, Coal City Girl Scouts, Coal City Lions Club, GFWC IL Junioretts Club, GFWC Junior Womens Club, Grundy County Senior Citizens Council, Music Boosters, and 4-H Club.