Lily was the last town built on the Chicago, Milwaukee and St. Paul Railroad between Bristol and Madison. The railroad was built in 1887 and, in 1894, a flat grain house was built and a sidetrack was graded by the settlers. The railroad company was then obligated to build a sidetrack, which was completed in 1896. A switch shanty was used for a depot until 1900 when the depot was built.
The town was named by Ross E. Parks who was postmaster at the post office which was about a mile and a half from the town site. Parks named the town for his sister Lily.
Mail was brought to his place by horse and cart twice a week from Clark. The post office was later moved from his homestead to the Barber homestead and then to the Patterson homestead. It was eventually passed on to Emma Johnson and later moved to the store operated by J.T. Larson.
Franklin Barber built the first general store. The town hall was built in 1895. At one time there were six elevators in business.
Today only a handful of houses stand in Lily where a few residents still call home. The fourth Sunday every June, Buffalo Plains Historical Foundation helps the small town of Lily come to life. Buffalo Plains' annual church service, buffalo dinner fund raiser and meeting draws many from all over the nation who come to relive memories of the good ol' days in Lily.