The Colony is home to the Five Star Athletic Complex, completed in 2003. The Colony was named the Sports Illustrated 50th Anniversary Sports Town of The United States in that same year. The city is home to Pizza Inn's corporate headquarters, as well as an Edward Don distribution center and a variety of small and medium-sized businesses. The Grandscape development, anchored by Nebraska Furniture Mart, is driving a new development boom in the city.
Located on the southeast side of the city, across Sam Rayburn Tollway from the larger part of the city, is Austin Ranch, a mixed-use development consisting of retail businesses, apartments and condominiums.
The Colony did not exist before 1969, when home developers Fox and Jacobs (since purchased by Centex) purchased most of the land located around State Highway 121 and Farm to Market Road 423. They planned the development of a new "dream city" modeled after the city of Dallas, consisting primarily of single-family homes grouped as a "colony". The homes were served by a municipal utility district formed to bring water, electricity (via Texas Power and Light), cable television (via Lakeside CATV) and telephone service (via Southwestern Bell).
In 1976, one of the original homeowners associations petitioned the city of Frisco to remove the area from its extraterritorial jurisdiction. A vote was held in January 1977, and the City of The Colony was officially incorporated at that time (the name Colony was already in use, and thus the current name with the definite article was chosen). In 1987, the small lakeside community of Eastvale and The Colony voted to merge. The town has grown significantly since then.