In 1882, the community of Orange was founded and renamed Chipley. It was the year the Pensacola & Atlantic (later L & N) Railroad was completed beyond the town site. Ironically, since Washington is still a dry county today, the first business enterprise was a wine shop that had been established on the site in 1881 by B. W. Berry, who also operated a pre-Prohibition Era whiskey distillery on land that nearly a century later would become Falling Waters State Park Recreation Center, just south of Chipley on Hwy 77.

Berry's business however came to an end in 1899, when the Washington County electors voted by a narrow margin to prohibit the manufacture or sale of alcoholic beverages within its boundaries. Construction of a railway siding was completed in 1882 beside what was to become known as Tank Pond, near today's Agricultural Center and City Hall. Water was pumped from the pond into an elevated tank, where the steam-driven locomotives stopped to re-supply. The locomotives also obtained supplies of wood for fuel.

The original name of Orange, was probably for Orange Hill, the most prominent neighboring community. Initial plans called for a town to be platted beside the railroad on a hill perhaps three or four miles east of Tank Pond, near the future site of the National Egg-Laying Test Site. That site was then in Jackson County, a circumstance that prompted some of the Orange Hill and other Washington County promoters to seek a site in their county. They visualized county seat status for the proposed town, but they realized it could not be achieved in Jackson County. Marianna, then the largest town on the railroad east of Pensacola, had been well-established as the seat of government for Jackson County for half a century.

Soon after the site decision was made, the men named the town Chipley in honor of the railroad builder. As the town developed, however, its northern and eastern sections spread into Jackson County. That created problems, particularly for law enforcement and school officials, and that led to a border adjustment in 1915 that gave Chipley more Washington County "elbow room." Today as Chipley continues to grown many homes including new housing can be purchased for a very modest $100,000 - $300,000 making this an attractive area for first time home owners.