In 1883, Major Cyrus E. Graves, a retired veteran of the Union Army, sailed into Melbourne Harbor. Major Graves was most impressed with the area and decided to buy land which was available on the barrier island across the Indian River from Melbourne. During the next four years, he bought approximately six hundred acres which comprises present day Melbourne Beach. There was an eager attempt to grow pineapples and other tropical fruits, but the freeze of 1895, known for years as the "Big Freeze" wiped out the local growers and no real commercial attempt was evermade again in the Melbourne Beach area.

The year 1889 was a busy year for Melbourne Beach. The pier, bathhouse and rail-road were built. The railroad consisted of a single pushcar which was used to transport groceries,supplies and people from the dock at the pieralongOcean Avenue to the Ocean.Prior to 1920, transportation to and from Melbourne was by a small ferry boat which was a sailboat, later replaced by a motor launch. The ferry service remained the only means of transportation until the Melbourne Causeway was built in 1921. The Town was incorporated in 1923 with a population of a few hundred residents. After experiencing several boom and bust periods, the population of the Town began to stabilize after the Second World War with growth occurring more evenly. The projected maximum population, based upon past growth trends and future projection is approximately 4,000 persons.