Junction City began when the Louisville and Nashville Railroad reached the area.

The southeastern part of Junction City was once the separate town of Shelby City, incorporated in 1867, and named for Kentucky's first governor Isaac Shelby, who lived and was buried nearby.

The tomb of Kentucky's first governor, Isaac Shelby, and his homestead Traveler's Rest, is located across the Lincoln County line, just south of this part of town.

[7] According to the United States Census Bureau, the city has a total area of 1.9 square miles (4.8 km2), all land.

[8] The city lies in a broad valley south of Danville, and just north of the border between Boyle and Lincoln counties.

Much of Junction City is concentrated along Shelby Street between the Cincinnati Southern tracks on the west and U.S. Route 127 on the east.

25.6% of all households were made up of individuals, and 12.3% had someone living alone who was 65 years of age or older.