When the settlement that is now Chipley was first founded, it was named "Orange." In 1882, the settlement was renamed in honor of William Dudly Chipley, a railroad magnate and Florida State Senator.

The original Chipley City Hall is a historic building located on 5th Street in downtown Chipley. At times it has served as the Washington County Public Library and as home to the Washington County Chamber of Commerce. The building was added to the National Register of Historic Places in 2005. The historic Women's Club of Chipley, on the same bock of 5th Street, was added to the National Register in 1997. There is an area of South 3rd Street in Chipley that was added to the National Register as an Historic District in 1989. 16 of the buildings in the district are also listed on the National Register.

Chipley has made a name for itself with the Spanish Trail Playhouse, an effort to bring live theater to the small town. The playhouse first began presenting plays in the early 1960's and did well for seven seasons before closing its doors in 1968. The idea was reborn in 2006 and incorporated as an official business in 2007. In September, 2008, the Spanish Trail Playhouse opened its curtain for a three-day run of Steel Magnolias and has seen successful seasons ever since.

Chipley is located in the northeastern part of Washington County, just north of Interstate 10. Falling Waters State Park is just south of Chipley on the other side of the Interstate.