Clifton-by-the-Sea was established in 1910 by local landowners G.C. Perkins and W.Y. Fuqua. It was developed as a bayside resort with parks, hotels, summer homes, a bathhouse, and a large pier with a pavilion. Houston families were attracted to the tranquil environment with fresh sea breezes, fishing, swimming, and orchestral concerts.

Both the 1915 and 1943 hurricanes caused major damage to the area, and although some resort amenities were rebuilt, the area never fully recovered. After World War II this area expanded with permanent homes for people employed at the nearby petrochemical plants. By 1948, the influx of new residents made it necessary to establish a new post office. However, the U.S. Postal Service informed the residents that the name Clifton-by-the-Sea was too long, and they could not shorten it to Clifton because there was already a Texas town with that name. So, residents agreed to be called Bay Cliff, as it was the name of the subdivision at the center of business. Everyone was very surprised to see that the name was misspelled on the postal paperwork!