Bally was originally called Goshenhoppen, possibly deriving from an Indian word meaning meeting "place".

Clergyman Ulrich Beidler erected the first house of worship, the Mennonite Church in 1731.

Father Theodore Schneider, a Jesuit priest, came to the area in 1741 and established what would be just the third Catholic mission church in the 13 original colonies.

On land received from the Mennonite community, Father Schneider built St. Paul's Chapel in 1743.

After several name changes, it is currently known as St. Francis Academy, and is the oldest currently operating co-educational Catholic school in the nation.

In 1912, Bally resident Annie Funk, a Mennonite missionary to India, died during the sinking of the RMS Titanic.

Funk was en route to Bally to visit her ailing mother, and reportedly gave up her seat in a lifeboat to another passenger as the ship sank.

The borough's name is a reference to the large number of dairy farms in the valley.

Italian artist, furniture designer, and metal sculpture musician Harry Bertoia settled in the Bally area, where he established Bertoia Studio on Main Street in Bally.

[4] According to the U.S. Census Bureau, the borough has a total area of 0.5 square miles (1.3 km2), all land.