Its name originated from the city's location on an island between the Grande Ronde River and a nearby slough.

A Boise Cascade particle board plant existed near Island City.

The Lighthouse Pentecostal Church is located in Island City, and was the site of a community COVID-19 outbreak over the weekend of June 13–14, 2020.

By June 16 there were 236 cases linked to the church due to a wedding that weekend.

[8] According to the United States Census Bureau, the city has a total area of 0.98 square miles (2.54 km2), all land.

21.3% of all households were made up of individuals, and 10.8% had someone living alone who was 65 years of age or older.

17.9% of all households were made up of individuals, and 9.2% had someone living alone who was 65 years of age or older.