Troy was settled primarily by Scandanavian immigrants in the late 1800s.
Troy was originally known as Huff's Gulch. In 1890 John P. Vollmer was instrumental in extending the Spokane & Palouse Railway (later the Northern Pacific) to Huff's Gulch from Moscow as a start toward completion of its line to Lewiston.
After establishing a general merchandise store and a large livery stable, he had the town renamed after himself. It was incorporated as Vollmer in 1892. As a businessman Vollmer was very successful, amassing large landholdings and great wealth.
In 1897 the citizens rebelled against having their village named after a man who owned more than 32,000 acres of land, much of it gained by foreclosing on bank loans to farmers.
A Greek railroad worker suggested "Troy," the name of "the most illustrious city in the world" and backed it with an offer of a drink of whiskey for everyone who would vote to change the name. "Troy" received 29 votes; "Vollmer", 9. In the early 1900s, Troy had a bank, a flour mill, a general store, two meat markets, three saloons, several sawmills, one dentist, and a weekly newspaper.