In April 1893, the Missouri-Kansas-Texas Railroad Company (the KATY) started laying rails through an area known as Cane Island. The railroad was finished in 1895 and though there was little more here than a boxcar parked alongside the tracks for the station agent's office and a water tank for the steam engines, a portion of Cane Island was surveyed and laid out as a town that same year. Founder J.O. Thomas established the first post office and named the new town Katy, optimistically expecting the new railroad to bring residents, businesses and prosperity. In 1898, a depot was built from a standard plan. The depot became the hub of town activity and the train allowed many families to come to Katy from northern states. It was an important part of life for early Katy families and businesses. Other rail stops were abandoned over the years and the Katy depot became the main hub for rail activity west of Houston. Passenger service in Katy ended on November 23, 1957. All MKT depot service ended in 1965, but the train continued to stop in Katy for several industrial installations. The depot was abandoned in the 1970s. In 1978, the depot was slated to be removed or destroyed and a concerned group of citizens formed The Katy Heritage Society to save the important building. The city purchased the depot and in 1979 it was moved to an area near Katy City Park where the society carefully researched and restored it. In 1986, the Heritage Society acquired a caboose to park adjacent to the depot. The rail line remained busy with many trains passing through Katy on a daily basis. The Katy Railroad formally was merged into the Union Pacific Railroad system on August 12, 1988. The Texas Department of Transportation bought the old MKT right of way from Union Pacific in 1998, and the line was closed from Katy to Houston in 2000. The rail line then was removed as part of the expansion of Interstate Highway 10. There still is rail service in Katy serving local industry, but the tracks terminate at the east side of town at Katy Fort Bend County Road. In 2005, the city of Katy acquired land near the original depot location, so the MKT Depot and Caboose were moved once again to build Railroad Park. The Katy depot is now used for the City of Katy Visitors Center as well as the Katy Heritage Society’s museum of local MKT railroad history. The community's only public art project, All Aboard Katy! is the most recent nod to its railroad history, with the installation of painted locomotives throughout the Katy area that remind visitors and residents of Katy's heritage and help unite and identify this rapidly growing diverse community.
As the only city in the incorporated U. S. named for the MKT, the town is proud of its historical link to the Katy Railroad and its ongoing association with Union Pacific.