Colony is located in southern Cullman County at 33°56′42″N 86°53′58″W / 33.94500°N 86.89944°W / 33.94500; -86.89944 (33.945011, -86.899465),[3] about 1 mile (1.6 km) north of the Mulberry Fork of the Black Warrior River.

The town is located along Alabama State Route 91, approximately one mile west of Interstate 65.

[2] Colony most likely was originally established soon after the emancipation of slaves after the Civil War, during Reconstruction.

It is believed that the original settlers of the town were most likely freed slaves from Baltimore, Alabama.

[6] In the early days of Colony it was not considered part of Cullman County because the freed Blacks were not welcome.

But when coal mines began to open adjacent to Colony the leaders of Cullman County wanted to incorporate the coal mines into the county for economic reasons, and were forced to add Colony as well.