His father was William Henry Lacy, who arrived in Fuzhou in 1887 from Milwaukee, Wisconsin, and directed the Foochow Mission Press and after 1903 the Methodist Publishing House in Shanghai.

After attending the Language School in Nanking, Lacy served as district superintendent in Jiangxi Province in 1916–1917 and 1919–1920, and president of William Nast College, Jiujiang (原南伟烈大学，现九江同文中学).

[2] Carleton Lacy's tenure as bishop was set to end in 1949 but the advent of the Communist government made it impossible to hold a general conference or elections.

Lacy was the only Westerner in Fuzhou area denied an exit permit, detained under house arrest by the newly established regime.

[4][6] Within weeks after his request was finally granted, he died of a heart ailment at Union Hospital, Foochow (福州協和醫院) on December 11, 1951.

[4][7][8] Lacy was buried in the Foochow Mission Cemetery with an unmarked tombstone, and his cook was the only one permitted to attend his funeral.

In 1947 he returned to China with his wife Frances M. Thompson, a native from Mount Holly, North Carolina, whom he married in 1944.

Creighton Lacy subsequently taught philosophy at Nanking University, Bible at Anglo-Chinese College, Foochow, theology at Union Theological School, Foochow, and finally, along with other missionaries, was expelled from China in December 1950, returning to Yale University where he finished his Ph.D. in Christian Social Ethics in 1953.